Keeping Medicare costs low can be a confusing challenge. But avoiding three common mistakes helps prevent increased premiums and higher costs. MedicareAdvantage.com explains what these mistakes are and how to avoid them to save money while getting the best health care.
Many believe they’ll begin saving money on health care costs once they transition to Medicare.
But not following certain Medicare guidelines – which can be confusing and tricky – can cost serious amounts of money in late enrollment fees, unnecessary out-of-pocket costs, and more.
Three expensive Medicare mistakes are not signing up for the right plan, not signing up at the right time, and using the plan outside the network.
We explain how to save money on Medicare by avoiding these three costly, but common, mistakes.
1. Not enrolling in Medicare at the right time
You might not be automatically enrolled
You might assume that you’ll turn 65 and will just receive your Medicare benefits wrapped up in a bow as a birthday present. Not so fast.
1 in 4 seniors these days are choosing to delay retirement benefits in order to qualify for the maximum Social Security benefits amount.
But if you delay your Social Security retirement benefits, you won’t be automatically enrolled in Medicare at age 65 and must sign up manually.
You might have to pay recurring Part B penalties
And if you don’t sign up manually within three months after turning 65, you’ll most likely be forced to wait until the next Medicare general enrollment period before you can sign up.
Plus, you could be on the hook for late enrollment penalties that will last for the rest of your life.
The late enrollment penalty for Medicare Part B is 10% of the cost of the Part B premium for each 12-month period that you were eligible for Medicare, but didn’t sign up.
If the Centers for Medicare & Medicaid Services (CMS) slaps you with these late enrollment fees, you’ll be forced to pay the penalty as part of your monthly Part B premium every month for as long as you remain enrolled in Part B.
The standard Part B premium in 2021 is $148.50 per month. This means that missing your enrollment period by even one single day could cost you around $178 per year
And that amount will increase every year because the Part B premium typically increases each year.
You might have to pay recurring Part A penalties
Most people don’t pay a premium for Medicare Part A, but if you don’t qualify for premium-free Part A and don’t sign up when you’re first eligible, your monthly Part A premiums may go up by 10%.
Plus, you’ll have to pay the penalty for twice the number of years you were eligible for Part A, but didn’t sign up.
You might have trouble getting a Medigap plan
Additionally, millions of Medicare beneficiaries supplement their Medicare coverage by enrolling in a Medicare Supplement plan, also called a Medigap plan.
A Medigap plan helps pay for Medicare deductibles, coinsurance, copays and other out-of-pocket costs you face when you get Medicare-covered services.
If you wait too long to sign up for a Medicare Supplement Insurance plan, insurance companies will be able to use medical underwriting to determine how much to charge for your premium.
This means they can charge you more or even deny coverage altogether based on your health.
If you want Medicare Supplement Insurance, the best way to avoid medical underwriting is to apply during your Medigap Open Enrollment Period.
That’s the six-month period that starts as soon as you’re at least 65 years old and enrolled in Medicare Part B.
2. Not enrolling in the right Medicare plan
Not enrolling in the right Medicare plan for your needs can not only leave holes in your coverage, it can leave you with serious holes in your pocket as well.
For example, if you wear hearing aids, try to enroll in a Medicare Advantage (Medicare Part C) plan that covers them.
If you take a specific medication, sign up for a Medicare plan that covers that drug.
If you buy a Medigap plan, buy one with ample coverage in the areas of health care that you use most.
Otherwise, you could end up paying potentially high out-of-pocket costs for things you need that could have been covered by a plan you missed out on.
Too many beneficiaries simply sign up for the plan with the lowest premium or the one their spouse or a friend enrolled in.
Instead, choose a plan that is best tailored to your health care needs to minimize your out-of-pocket costs.
3. Not staying in your Medicare plan’s provider network
It’s a common myth among Medicare beneficiaries that they can use their coverage anywhere.
But not every health care provider accepts Medicare. And some who do maintain the right to charge up to 15% more than the Medicare-approved amount for their services.
And private Medicare plans typically operate with a network of participating providers, much like employer-sponsored health insurance plans.
If you get medical care outside of that network, you can find yourself responsible for a much higher percentage – or even the entire cost – of those services.
Recommended for you:
- Medicare vs. Medicaid: What You Need to Know
- Get Help with Medicare Questions from State Programs
- Get the Truth Behind 5 Common Medicare Myths
Guest contributor: Christian Worstell is a licensed insurance agent and a Senior Staff Writer for MedicareAdvantage.com. He is passionate about helping people navigate the complexities of Medicare and understand their coverage options. His work has been featured in outlets such as Vox, MSN and The Washington Post, and he is a frequent contributor to health care and finance blogs. Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. He currently lives in Raleigh, NC.
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