Navigating the path of medicare supplement insurance on your own can be a risky endeavor if you don't know what you're doing. Here are six common mistakes that can easily be avoided with the help of an experienced insurance agent on your side.
1. Getting the wrong prescription drug plan
One of the most common mistakes made by retirees who are new to Medicare is purchasing the wrong Medicare prescription drug plan. These plans are not easily understood. Many factors need to be considered before enrolling including the monthly premium paid for the plan, whether or not the plan has a deductible, the co-payments for your prescriptions covered under the plan. The quickest way to navigate your options is to visit medicare.gov. Here's how you can do it as of January, 2020:
- In the middle of the homepage for medicare.gov you will see a button to "Find 2020 Health & Drug Plans"
- Click the button. You can create an account or continue without logging in.
- Answer a few questions that pertain to your situation and put in all your medications EXACTLY as they says on the bottles.
- After you answer the questions, you'll receive a list of all Medicare approved plans.
Now is the hard part, determining which plan is the best. I recommend you don't even get this far, it's not worth making a mistake and costing yourself money trying to figure it out. It's not easy, trust me. HAVE AN AGENT do it. It cost you nothing to have that done by an expert.
Also, just because you friend has a plan that's good for them doesn't mean it's good for you. For every 12 months you delay signing up for a Part D plan, your monthly premium may be 1 percent higher for every month that you did not have one. You won’t have to pay the Part D penalty if you can show Medicare that you had drug coverage as good as that provided by a Medicare Part D plan. An example would be an employer plan that included prescription drug coverage.
2. Unnecessarily enrolling in Medicare Part B
It's important to let Medicare know if you intend to enroll in Part B so you don't get a penalty down the road. People who are still working sometimes keep their company insurance. So the mistake would be if you went ahead and enrolled in Part B and cost yourself $144.60 premium in 2020 for literally no reason, when you could have opted out because of having an employer plan. Not only would you save not having to pay for Part B premium, but later on when you retired you could then get Part B and have guarantee issue, meaning no health questions.
Once you quit working, you have eight months in which to sign up part B. For every 12 months you delay enrolling, your monthly Part B premium may be 10 percent higher. The penalty won’t apply if you have job-based insurance or are still under your special enrollment period.
If you enroll in Part B while you're still working and keep the company insurance in your retirement, and someday you want to drop it and get a Medicare Supplement you would have to qualify. You have no guarantee issue when you voluntarily leave the plan. If you lose it against your will, then you would have guarantee issue. When considering your options for this it would be in your best interest to contact a trusted agent who is well versed in these situations.
3. Buying the wrong coverage
Another common mistake is buying the wrong coverage. Medicare doesn't make it easy to figure out what is best. The booklet they provide has lots of useful information, however they do not show what companies offer Medicare supplements like they do with Medicare Advantage Plans or Part D prescription plans. With Medicare Supplement plans you have A, B, D, G, K, L, M, N. Plan G will be the number one plan starting January 1, 2020. They have eliminated Plans C & F unless you were eligible for Medicare prior to January 1, 2020. Plan C & F had no copays and the only difference between the two is the Part B Excess benefit (F covered it and C didn't). Plan G is the number one plan as of January 1, 2020 and will only have a $198 deductible on the Part B side (doctors etc.). After that there will be no copays. Plan N is another good option and should be discussed with your trusted insurance agent.
4. Not fully comparing original Medicare with Medicare Advantage plans
If you are eligible for Medicare, you have a choice to receive your benefits through original Medicare or a Medicare Advantage plan. The type of Medicare coverage you choose depends on factors such as your health care needs, the insurance your doctors accept, where you live, whether you travel often, and your financial situation.
Original Medicare is the traditional program offered directly through the federal government. It comprises Part A, which covers hospital costs, and Part B, which covers doctor visits and other outpatient services. The vast majority of doctors in the country take this insurance. To help pay for your out-of-pocket costs, you can buy a Medigap policy also called Medicare Supplement, which has its own separate monthly premium. Those plans are A, B, D, G, K, L, M, N or plan C & F if you in Medicare's system prior toJanuary 1, 2020. Original Medicare does not include Part D (prescription drug coverage), so you must sign up for a stand-alone Part D plan if you do not have other drug coverage. Original Medicare does not have a limit on your annual out-of-pocket costs.
Medicare Advantage is an alternative to original Medicare. These plans provide Part A, Part B and usually Part D benefits. They may also offer certain benefits that original Medicare does not cover, such as dental or vision care, and they may also have different costs and rules than original Medicare. For example, a Medicare Advantage plan may require you to get a referral from a primary care physician before it will cover care from a specialist. Medicare Advantage plans generally have a network of providers in your area and may not cover care if you see an out-of-network provider (except in emergencies). Medicare Advantage plans have an annual out-of-pocket limit, and you cannot buy a Medigap policy when you are enrolled in Medicare Advantage.
5. Misunderstanding enrollment periods
You may have read about “open enrollment” and gotten the idea that this is the only time you can sign up for Medicare, change your Medicare Supplement, or buy a Part D drug program. Not true! In Medicare, open enrollment (October 15 to December 7 each year) is only for people who are already in a Part D or Medicare Advantage program and want to change their coverage for the following year. It has nothing to do with Medicare Supplement plans.
If you’re joining Medicare for the first time, you get your very own enrollment period. This may be your seven-month initial enrollment period (around the time you turn 65) or a special enrollment period if you have health coverage from an employer for which you or your spouse actively work, or some other time frame depending on your situation — for example, if you qualify for Medicare due to disability, live outside the United States, or are a legal immigrant. It is always best to consult with a professional.
6. Not working with an agent
Working with a trusted agent is a no brainer. You don't pay them anything, they find you the best plans available, keep you informed (or should), and save you hours and hours of searching. I talk to clients daily who are searching online for a better deal. When I ask if they plan on using an agent they often say no. They tell me they are cutting out the middle man to save money. I smile and say you're actually costing yourself money by doing that. You don't pay us, the insurance company does, and its not added to your premium, Unless you're an expert at navigating Medicare and everything that goes with it, you are making the biggest mistake of all.
Imagine you do nothing, and the agent/broker does all the research and explains how they came up with your best plans and prices and you save money. It doesn't get any better than that.