Retirement is supposed to be a time to enjoy the fruits from decades of labor, but managing your health care in your golden years can feel like a whole new job.
And it’s not a simple one. The current official guide to Medicare, the federal health insurance program primarily reserved for folks age 65 and older, clocks in at more than 100 pages.
Unfortunately, it’s easy to make Medicare mistakes. At best, they can cost you extra cash. At worst, they could leave you with a gap in coverage.
If you have yet to enroll in Medicare but are nearing age 65, you might want to first check out “4 Pitfalls for First-Time Medicare Enrollees.”
The following are some mistakes that people who are already enrolled in Medicare can’t afford to make with their coverage.
1. Picking a plan based on the advice of friends or insurance agents
Medicare is complicated. It’s unfair to expect your friends to be experts, especially about the particulars of your own situation, which may be different than theirs.
Insurance agents may have the needed experience, but they aren’t unbiased. You could be steered toward a plan that doesn’t work best for you.
The nonprofit Medicare Rights Center operates a national helpline on weekdays to help seniors figure out their options, rights, bills and more. Additionally, Medicare beneficiaries and their families and caregivers have access to free guidance from their local State Health Insurance Assistance Program (SHIP), as we detail in “14 Things That Are Free With Medicare.”
2. Forgetting about your ‘freebies’
Certain medical services and products are free for Medicare recipients, at least in that recipients do not have to pay anything extra, such as a copay or out-of-pocket fee, or meet a deductible to take advantage of these freebies.
This is true regardless of which of the two main types of Medicare coverage you have, Original Medicare or Medicare Advantage.
To learn more about things included with Medicare, check out “14 Things That Are Free With Medicare.”
You can also get one-on-one counseling to help navigate the complexity of Medicare through State Health Insurance Assistance Programs.
3. Missing your annual chance to change plans
Your plan’s coverage, costs and benefits can change from year to year. Fortunately, you get an opportunity during open enrollment periods to examine your options, make sure you’re still getting the best value and, if you wish, change your plan.
This is true for people with Original Medicare, which is provided directly through the federal government, and those with Medicare Advantage plans, which are offered by private companies approved by the government.
It’s also true for people who bought separate prescription drug plans, also known as Medicare Part D plans, to supplement their Original Medicare coverage. (People with Medicare Advantage, which is designed to be an “all-in-one” option and generally includes drug coverage, are not eligible for separate Part D plans.)
The fall Medicare open enrollment period always runs from Oct. 15 until Dec. 7. There’s also a Medicare Advantage open enrollment period, which always runs from Jan. 1 to March 31.
During the open enrollment periods that apply to you, it’s a good idea to look at the various plans available to you locally, see what their premiums will be in the coming year and learn your share of costs. You should also confirm that your favorite pharmacies, hospitals and medical providers still will accept your plan in the new year.
Before you do this open enrollment homework, though, it helps to round up the following resources:
- Medicare.gov — particularly the Medicare Plan Finder feature
- The latest annual “Medicare & You” handbook
- Evidence of Coverage document
- Plan Annual Notice of Change document
If you have a Part D plan, also check out “How to Save Hundreds of Dollars on Medicare Drug Costs” for step-by-step instructions on shopping around.
If you decide to change your Medicare health care or drug plan, tread carefully. Medicare rules can be fussy and complex. There’s a lot at stake, as we detail in the next two sections of this article.
Remember that you have access to free one-on-one Medicare insurance counseling and assistance via State Health Insurance Assistance Programs (SHIPs).
4. Losing in-network access
Not all health care providers accept all Medicare coverage. Medicare Advantage plans, in particular, are known for often limiting enrollees to a set network of certain doctors.
If you go to a health care provider who isn’t in your plan network, you could face higher copayments or your insurer might refuse to pay any of the bill.
Or, if your current plan’s network changes, with your doctor no longer part of the network, you could get surprised by higher costs, even if you had been seeing that doctor for years.
So, during open enrollment periods, check with both your insurer and your health care providers to be sure that those providers will continue to be in-network during the next plan year. If not, consider whether you would be better off switching plans.
5. Losing Medigap coverage
People with Original Medicare have the option to buy a supplemental policy from a private insurer, often called a Medigap policy, to cover some of the costs that Original Medicare doesn’t fully cover.
If you have a Medicare Advantage plan, you can’t buy a Medigap policy. So, if you decide to switch to a Medicare Advantage plan from having Original Medicare with a Medigap plan, you will drop the Medigap plan. But that is risky.
Only during your initial Medigap enrollment period — when you first became eligible to sign up for Medicare — are you guaranteed coverage by Medigap plans in your area. Then and only then are insurance companies forbidden from denying you coverage or charging you more money because of pre-existing conditions, says Reuters.
Afterward, in most states, the door opens for insurers to ask about your health status.
So, depending on your health and where you live, if you lose your initial Medigap coverage due to switching to Medicare Advantage, you could end up paying significantly more for a Medigap policy if you later decide to switch back to Original Medicare. Or you could be barred from certain plans.
6. Getting hit with a tax penalty for HSA contributions
If you contribute to your health savings account (HSA) while on Medicare, you risk a tax penalty.
The Medicare handbook advises that you should stop making HSA contributions the month before your Medicare Part A coverage (which primarily covers inpatient hospital-related costs) starts. That can be as early as six months before you apply for Medicare or Social Security.