Understanding the alphabet soup of Medicare is hard enough without getting lost in the details. But understanding the options – and what mistakes not to make – can help your clients age gracefully and is an essential part of any retiree's financial plan that advisors shouldn't ignore.
First, let's generally define the Parts of Medicare. Part A, referred to as original Medicare, focuses on hospital coverage. Part B is medical coverage. Part C (also called Medicare Advantage) is a different way of putting Parts A and B into one plan, offered by private companies. Part D is prescription drug coverage.
The rules of Medicare are complicated and laden with deadlines that are costly to miss. Via Kiplinger, here are 11 common Medicare mistakes to avoid:
1. Not reviewing your Part D Plan annually
Medicare Part D is a headache for many to keep on top of. But remember these key points:
- Open enrollment runs from Oct. 15 to Dec. 7 every year.
- During open enrollment it's essential to review options because there might be changes to your current plan, meaning your cost and coverage would vary. Be leery of plans that increase premiums, increase your percentage of cost for drugs, or other requirements, like having to use a specific pharmacy, to be covered.
- Make sure you check if any drugs you're on have gone generic, as you might get a nice price reduction.
- Medicare also helps you to compare plans. Check out the various links on Medicare.gov or AARP.org for more information, guidance and price comparison tools.
2. Picking the same Part D plan as your spouse
Not all Part D plans are alike, and just because a plan works for you it might not be the same for your spouse, who may be taking different prescriptions. Use the Medicare Plan Finder to determine your out-of-pocket costs on each plan. Also keep in mind that some plans require the use of specific pharmacies.
3. Going out of network on private Medicare Advantage plans
If using private Medicare Advantage plans, similar to PPOs or HMOs, you'll need to utilize the network of doctors and hospitals within the plan to get the lowest co-payments. Be wary that if you go out of network, there may be no coverage at all.
4. Not knowing how to switch Medicare Advantage plans anytime if needed
Even outside the annual open enrollment period, it's possible to switch plans for life-changing events, like moving to a place that isn't in your current plan's geographical coverage. And if you're in the five-star plan, you can make a switch any time during the year. Also, from Jan. 1 to Feb. 15, you may be able to switch from Medicare Advantage to traditional Medicare plus Part D prescription-drug plan.
5. Not considering Medigap within 6 months
Once enrolling in Medicare Part B, you have six months to buy any Medicare supplement plan in your area even if you have pre-existing conditions (and at age 65, who doesn't?). But after six months, insurers can reject you or charge more depending on your health. It depends on your state rules and insurer's policies. Check at Medicare.gov for your options.
6. Not opting for Medicare when you turn 65 (most of the time)
