Medicare Mistakes to Avoid
Adam has Medicare part A (hospital insurance), along with retiree insurance from his former employer. Upon retirement, his benefits department told him his retiree insurance would offer identical coverage that he had while he was working and he did not need to sign up for Medicare Part B. Two years later, and after a routine checkup with his doctor, Adam learns that he has cancer.
Adam is quickly put on a Chemotherapy plan. However, after a few weeks, Adam is shocked when he begins receiving thousands of dollars in medical bills. Adam’s retiree insurance plan won’t pay for his coverage because it pays secondary to Medicare, and since he doesn’t have Medicare Part B, he effectively has NO coverage for chemotherapy or many other medical services for that matter.
Thousands of situations like Adam’s have become realities, either due to poor information, lack of research, or simply because Medicare is a form of insurance that many use, but few truly understand. I have seen miscommunications about Medicare that put people in situations that required careful planning to navigate solutions. The program has many rules, requirements, and time periods to act in that make it unmistakably a complicated government product. With that in mind, here are some considerations to help you avoid some common Medicare mistakes.
Sign up on Time: Make sure to sign up at the right time to get proper coverage and avoid penalties. Most people sign up when they turn 65 and are initially eligible. If you sign up when you turn 65 or, during a special enrollment period, your coverage will start right away. However, if you wait to sign up later for Medicare and realize that you need it sometime in the future, you could have to wait to get coverage, and you might have penalties to pay for the rest of your life as well.
Know What Medicare Covers: Medicare’s coverage is more limited than most people realize. For instance, according to one study1, 56% of baby boomers believe that Medicare covers long-term care. It does not. Most people also do not realize that Medicare does not cover dental or vision. With a Medicare supplemental policy or long-term care policy you may be able to fill some of these gaps in coverage.
Medicare Supplemental Policies: With just Medicare parts A and B, individuals have no out-of-pocket maximum. A Medicare supplemental policy can cover extended hospital stays, the 20% deductible for Part B doctor visits, and other expenses to limit your out-of-pocket expenses.
Drug Coverage: Medicare Parts A and B do not offer coverage for your drugs. This is covered under Medicare part D. This is insurance that you can sign up for separately through a private insurer. It is important to know when to sign up for Medicare Part D, because if you sign up late, you could face penalties that you must to pay for life.
Any decision regarding Medicare can be complex, and there are certainly more details and nuances to be discussed. Talk to a CERTIFIED FINANCIAL PLANNER™ professional to help you navigate Medicare and make the right decisions.
David Faskas, CFA, CFP®
Chief Investment Officer
KMH Wealth Management, LLC
