Over the next few decades, there will be one American turning 65 every 10 seconds, according to AARP. This means that a record number of people will be applying to Medicare when they turn 65. Since this is the first and only time for most people, it makes sense to know the rules and plan ahead.
Medicare covers the bulk of your health care expenses after you turn 65. But Medicare's rules can be confusing and mistakes can be costly. If you don't make the right choices to fill in the gaps, you could end up with high premiums and big out-of-pocket costs. Worse, if you miss key deadlines when signing up for Medicare, you could have a gap in coverage, miss out on valuable tax breaks, or get stuck with a penalty for the rest of your life. Here are some common Medicare mistakes you can avoid.
Forgetting That You Should Sign Up for Medicare at 65
If you're already receiving Social Security benefits, you'll automatically be enrolled in Medicare Part A and Part B when you turn 65 (although you can turn down Part B coverage and sign up for it later). But if you aren't receiving Social Security benefits, you'll need to take action to sign up for Medicare. If you're at least 64 years and 9 months old, you can sign up online. You have a seven-month window to sign up—from three months before your 65th birthday month to three months afterward (you can enroll in Social Security later).
You may want to delay signing up for Part B if you or your spouse has coverage through your current employer. Most people sign up for Part A at 65, though, since it's usually free—although you may want to delay signing up if you plan to continue contributing to a health savings account. See the Social Security Administration's "Applying for Medicare Only" for more information. If you work for an employer with fewer than 20 employees, you must sign up for Part A and usually need to sign up for Part B, which will become your primary insurance (ask your employer whether you can delay signing up for Part B).
Not Picking the Right Medigap Plan
If you buy a Medicare supplement plan within six months of enrolling in Medicare Part B, you can get any plan in your area even if you have a preexisting medical condition. But if you try to switch plans after that, insurers in most states can reject you or charge more because of your health. It's important to pick your plan carefully. Some states let you switch into certain plans regardless of your health, and some insurers let you switch to another one of their plans without a new medical exam.
Keeping Your Part D Plan on Autopilot
Open enrollment for Medicare Part D and Medicare Advantage plans runs from October 15 to December 7 every year, and it's a good time to review all of your options. The cost and coverage can vary a lot from year to year—some plans boost premiums more than others, increase your share of the cost of your drugs, add new hurdles before covering your medications, or require you to go to certain pharmacies to get the best rates. And if you've been prescribed new medications or your drugs have gone generic over the past year, a different plan may now be a better deal for you.
It's easy to compare all of the plans available in your area during open enrollment. Go to the Medicare Plan Finder at www.medicare.gov/find-a-plan and type in your drugs and dosages to see how much you'd pay for premiums plus co-payments for plans in your area.
Buying the Same Part D Plan as Your Spouse
There are no spousal discounts for Medicare Part D prescription-drug plans, and most spouses don't take the same medications. Consequently, one plan may have much better coverage for your drugs while another may be better for your spouse's situation. Compare the plans based on the coverage for your specific drugs. Be careful if you and your spouse sign up for plans with different preferred pharmacies—some plans only give you the best rates if you use certain pharmacies, so you could end up paying a lot more if you get your drugs somewhere else.
Going Out-of-Network in Your Medicare Advantage Plan
If you choose to get your coverage through a private Medicare Advantage plan, which covers both medical expenses and prescription drugs, you usually need to use the plan's network of doctors and hospitals to get the lowest co-payments (and some plans won't cover out-of-network providers at all, except in an emergency). As with any PPO or HMO, it's important to make sure your doctors, hospitals and other providers are covered in your plan from year to year. After you've narrowed the list to a few plans, contact both the insurer and your doctor to make sure they'll be included in the network for the coming plan year. You can switch Medicare Advantage plans during open enrollment each year from October 15 to December 7.
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