With Medicare open enrollment happening now, it's the perfect time for beneficiaries to review their coverage and make important changes.
When Olivia and Roberto, both recently retired executives, transitioned from employer-sponsored insurance to Medicare, they thought they were prepared.
However, each quickly discovered obscure Medicare rules and unexpected costs that could have disrupted their retirement plans.
What are the lesser-known Medicare pitfalls? How can retirees avoid making costly mistakes? And how can advisors help guide their clients through these complexities?
Olivia's Part B Late-Enrollment Penalty Scare
Olivia delayed signing up for Medicare Part B because she still had health insurance through her employer.
After she retired, she learned that she only had an 8-month special enrollment period to sign up for Part B without a penalty.
If she had missed the deadline, her premiums would have permanently increased.
Fortunately, her advisor reminded her just in time.
Advisors should remind clients who delay Part B enrollment due to employer-sponsored coverage to sign up during their SEP to avoid penalties.
Missing this deadline could result in a 10% increase in premiums for every year they could have enrolled but didn't.
Roberto's Unexpected Hospital Costs Under Part A
Roberto underwent surgery and expected Medicare Part A to cover most of his hospital costs.
However, after 60 days in the hospital, he was surprised to find that daily co-payments kicked in, adding a significant financial burden to his stay.
Medicare Part A covers hospital stays up to 60 days after a deductible is met.
From day 61 to 90, co-payments apply.
Advisors should ensure clients understand these costs and consider supplemental insurance like Medicare supplement insurance, which is also known as Medigap coverage, to help cover these potential expenses.
Olivia's Skilled Nursing Facility Care Misunderstanding
Following her surgery, Olivia needed rehabilitation in a skilled nursing facility.
She assumed Medicare would cover the care, but because her hospital stay had been classified as "observation" rather than "inpatient," she didn't qualify for SNF coverage.
To qualify for Medicare-covered SNF care, a beneficiary must have a three-day inpatient hospital stay.
