5 Medicare Mistakes To Avoid When Turning 65
Ease of Medicare enrollment may lead to costly missteps
Turning 65 is a milestone for many people across the U.S. However, they may not think of Medicare eligibility as topping their gift lists.
This age is a critical turning point for those who see Medicare enrollment at 65 as their pathway to freedom—finally leaving their employer’s group health plan for the sunny skies of retirement. They consult with their tax and financial advisors, examine the nuts and bolts of their financial situation, and sign up for Medicare with relative ease.
It seems pretty easy to enroll in Medicare. In some ways, that’s a good thing. But this relative ease may be one of the characteristics of the Medicare program that lead people to take crooked pathways of excessive cost, coverage gaps and penalties when they make mistakes with their coverage choices.
Following are five common Medicare mistakes to avoid when turning 65—an especially complicated situation for individuals who are working when they reach this milestone.
1. Relying solely on retiree healthcare benefits. Many companies continue to offer retiree healthcare benefits to former employees but that's a declining trend. If you receive these benefits, know that they cannot replace Medicare. You still need to enroll in Medicare, or risk reduced coverage or costly penalties. Another trend is that more employers are discontinuing retiree benefits in greater numbers, so it’s important to be aware of this development and the options for coverage in retirement.
2. Enrolling in Medicare Part A (hospital coverage) or Part B (medical coverage) coverage while still employed. Until a few years ago, it was common for individuals who continued to work to enroll in Part A and/or Part B coverage when they turned 65. It was done almost automatically and without much consideration, primarily because that’s when someone’s Social Security benefits began. Changes in Social Security and Medicare programs, and the possibility of incurring penalties, mean this decision shouldn’t be made lightly.
It’s important to talk with a Medicare specialist or a financial planner skilled in Medicare rules when making Medicare decisions while working and turning 65.
3. Taking the “easy” path. The transition to Medicare coverage can appear simple if you don’t consider all your options. Don't rush through the process, sign or enroll without understanding what you're signing, or make decisions without asking for help. Examples of shortcuts include:
- Choosing a Medicare plan that a friend, neighbor or spouse uses because it’s convenient.
- Enrolling in traditional Medicare without looking at Medicare Advantage plan options.
- Selecting coverage because it’s similar to what someone had while they were working (i.e., same provider, same premium, etc.).
- Picking a Medicare plan for its visibility and ease (i.e., advertising and promotions), rather than because it meets the individual’s personal health and financial needs.
4. Seeing Medicare choices as healthcare decisions only, not financial decisions. Even with Medicare coverage, many beneficiaries may still have retirement medical expenses out of their own pockets that amount to thousands of dollars. Many people don’t realize this—anticipating only a monthly premium for Part B coverage, for example. Coinsurance, deductibles and other costs can add up due to chronic health conditions, unexpected medical procedures, or expensive brand-name prescription drugs.
Yes, it’s important to find a Medicare plan for health needs but making informed choices, especially with the help of experienced Medicare specialists, can provide incredible cost savings and value to the rest of their retirement.
Medicare alone could leave you in financial ruins if you don't understand the limits of Original Medicare. Almost everybody needs some kind of Medicare Advantage or Medigap plan along with Original Medicare.
5. Continuing to work because of dependent benefits. It’s not uncommon for the breadwinner in the household to continue working past retirement age to preserve healthcare benefits for a spouse or dependents in the household. One of the benefits that resulted from the Affordable Care Act is increased options for those individuals who once felt compelled to delay retirement because of healthcare coverage. Families can find a number of healthcare options through the state or federal health exchanges, allowing the working spouse to retire and enroll in Medicare, while providing for their dependents.
On a daily basis, thousands of Americans are becoming eligible for Medicare and enjoying the healthcare coverage provided through this federal program. Not everyone, however, is seeing the full benefits and cost savings because of a variety of missteps.
Reaching out to Medicare specialists and those experienced with benefits coordination and transitions between these types of healthcare plans can provide individuals with more reassurance and confidence about their critical healthcare and financial decisions at age 65.
This article comes to us courtesy of Tricia Blazier, J.D., personal health and financial planning director for Allsup. Allsup is a nationwide provider of Social Security disability, veterans disability appeal, exchange plan and Medicare services for individuals, employers and insurance carriers.