Don’t Mess Up Medicare

After enjoying your birthday cake, be wary of booby traps that could lead you into paying unexpectedly high health care premiums or out-of-pocket costs. Get savvy now to avoid any gaps in coverage or missing out on tax breaks. Worst of all, you do not want to get sucked into lifelong penalties that can build up and follow you over the long term.

Timing is everything

Failure to sign up on time is a common mistake. If you are not already receiving Social Security benefits (in which case you would be automatically enrolled in Medicare parts A and B), you can enroll during the period three months before and three months after your 65th birthday. Most do then sign up for Part A, as it is free anyway, although some prefer to delay signing up for Part B; for instance, if they are or their spouse is covered by a current employer.

Procrastinators watch out. Delays may cost you coverage gaps or — eek — even a lifetime of late enrollment penalties at 10% of the prevailing Part B premium for every year you neglected to enroll.

If you are choosing original Medicare, which is the classic version, you should also select a Medigap private insurance policy during the same crucial time period. A Medigap policy, an adjunct for parts A and B, plugs in some large items that classic Medicare does not cover. Without it, patients would be on the hook for some copayments, coinsurance and deductibles. Purchasers are only entitled to buy a Medigap policy at specified times; if they miss them, it may be too late and “the train will leave the station.” Unlike other insurance, Medigap insurers could reject you or charge more based on underlying medical conditions, except during those periods when guarantees apply.

Part D, which covers prescription drug costs, has Draconian rules of its own for dawdlers. Even if you never take more than an aspirin, you need to sign on at 65 because for every 12 months you delay, the Part D monthly premium may go up 1% — for years. The only excuse is to demonstrate you have equivalent drug coverage elsewhere.

Comparing plans

Most people find the most challenging task is comparing all available plans and their respective benefits. You need to check them all out carefully. It is not enough to rely on what somebody else may be suggesting or doing, however much you trust their good sense. Each person has an individualized set of needs, reflecting their health, finances, location, travel patterns, preferences and current doctors. Do your homework, taking into account both premium and out-of-pocket expenses. Plans change year to year, so review them annually.

A main distinction is whether you opt for original Medicare (parts A and B) or a Medicare Advantage plan (Part C). Original Medicare may make sense if you prioritize flexibility and choice. It is more widely accepted than MA plans. Can you afford a Medigap supplement plan? Do you travel much? An MA plan may not cover you outside your geographic area, except in emergencies.

If you choose original Medicare, you will also need a Medigap plan. Which one? Plans are labeled by letter, each of which offers the same benefits, but costs may differ. Look out.

If you go for an MA plan, verify. Call your doctors, pharmacies and hospitals to ensure they accept it. Flashy TV advertisements often show Medicare cards and toll-free hotlines, but those are not federal numbers!

When choosing a Part D pharmaceutical insurer, check its formulary list of drugs to see whether yours are included, and remember, spouses often take different medications.

Get vaxed!

Medicare offers extra perks, such as flu shots and other preventive vaccinations, screenings and wellness visits (which were called physicals in the old days). Take advantage.

Stay organized, keeping records of all your medical expenses, receipts and insurance statements (useful for tax purposes too).

Does this seem like a lot? If you’re confused — and many are — discuss your options with a qualified financial expert.

Reach out to Roz Carothers and her team at Triplett & Carothers to learn more.