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Guest Post by Adam Hyers
It can be a daunting task to sort through your options when you’re first eligible for Medicare. There are strict timelines, enrollment windows, late enrollment penalties, and several other important variables to consider. And the decisions you make now can have repercussions later. That’s why it’s so important to understand all of your options from the beginning.
Several helpful resources are available when you’re first eligible for Medicare, but even so, we see some consumers make similar mistakes. And one poor or mistimed choice can lead to short (and long term) insurance complications. Any misstep can cost you money and reduce your access to the best available care.
Below we’ll discuss some of the biggest Medicare enrollment mistakes we see consumers make and how to avoid them. This knowledge can go a long way in preventing insurance difficulties for you and your family.
Medicare is all about timing
The most common mistake we see at our agency deal with enrollment timing. The rules are fairly rigid when you’re new to Medicare as to what you should do and when you should do it.
And that brings us to our first mistake. This one is easier to avoid, but we see some people miss their Medicare Part B enrollment window. This can cause a lifetime of difficulties and additional costs. When you miss your Part B enrollment window, then you must wait until the General Election Period between January 1 and March 31.
Your coverage would then begin July 1, BUT you’ll assessed a lifetime penalty on your Part B premiums. The penalty amount depends on how late you were, but at minimum it will result in a 10 percent Medicare Part B 10 percent premium surcharge every month.
People enroll in Medicare Part B at different ages; it’s not always age 65. Some are enrolled early because they qualify for Medicare due to a disability — and others enroll after age 65 because they still have qualifying group health insurance at work.
Pro Tip: Even if you’re electing COBRA, you’ll still need to enroll in Medicare Part B once you reach age 65. Electing COBRA after age 65 does not allow you to defer starting Part B. The government has talked about changing this rule, but nothing has happened yet.
If you’re not sure when or how to enroll in Part B, talk with someone who can guide you through the process. HR managers, insurance agents who specialize in Medicare, and government employees should all be able to help you.
What to do once you’re enrolled In Medicare Part B
The clock starts ticking once you’ve enrolled in Medicare Part B. Your Medicare Part B enrollment affords you a personal seven-month Open Enrollment window when you can choose how to supplement your Medicare with no questions asked. This window includes the three months leading up to your Part B effective date, the month of, and the three months after.
For most consumers, this is the time to choose either a Medicare Supplement or Medicare Advantage plan. (You don’t need/can’t have both.) It’s also the time to find a Part D drug policy on either a stand-alone basis or as part of your Medicare Advantage coverage.
And that’s one of the biggest mistakes people make. They don’t enroll in supplemental coverage during their individual, seven-month Open Enrollment window. Once your window has closed, then medical underwriting may be required to purchase a Medicare Supplement. That means you can be turned down for coverage if you’re in poor health.
And if you don’t enroll in a Part D drug plan, then you’ll face a Late Enrollment Penalty when you do. Medicare uses a formula to calculate your penalty, but like Part B, it also lasts a lifetime. This means you’ll be paying more than the going rate for any Part D drug plan you choose. Even if you aren’t taking any prescriptions, it’s wise to purchase a part D drug plan when you’re first eligible.
(It should be noted that some people can opt out if they have creditable prescription drug coverage elsewhere, like through the VA or a union plan.)
Can’t I wait until the yearly Medicare Open Enrollment window in the fall?
Yes and no. There’s a lot you can do about your Medicare coverage each year between Oct. 15 and Dec. 7, but there are restrictions. Even though it’s referred to as “Open Enrollment,” the window is technically called the Annual Election Period — or AEP for short. There are some things you can and can’t do, but it won’t always give you a free pass to erase prior enrollment mistakes.
The common misunderstanding consumers have about AEP is thinking it allows for all types of insurance changes. During this short seven-week window, most consumers can purchase new Part D drug coverage, switch to a different Medicare Advantage plan, or even return to Original Medicare (from a Medicare Advantage plan).
You cannot, however, always purchase a new Medicare supplement (like Plan F, G or N) without going through medical underwriting. This means insurance companies are allowed to ask about your health even though it’s “open enrollment.” If you’re in poor health — and even if you already own a Medicare supplement — you may not be able to find and purchase a new Medicare supplement during the AEP window.
And if you’re enrolling in a Part D drug plan for the first time, you may still face a Late Enrollment Penalty if you were going without a policy and did not have any type of creditable coverage leading up to AEP.
In a nutshell, you can do a lot during the Medicare AEP window, but you don’t want to count on it for all types of changes and/or new enrollments opportunities. That’s why it’s so important to find the most suitable coverage during your own, personal seven-month open enrollment window at onset. For most, that’s when they are new to Medicare Part B.
Pro Tip: Did you know that Medicare rules allow for a one-time, 12-month trial period with a Medicare Advantage plan? If during those 12 months you don’t like this type of coverage, you can return to Original Medicare and repurchase the Supplement (like Plan F, G, N) you had before. But after 12 months, you will have to first wait for the AEP window, then pass medical underwriting in order to qualify for a Medicare Supplement. If you’re in poor health, it can be hard to find an insurance company who will take you. It’s good to keep this in mind when looking at your options.
Learning the Medicare landscape now will help you later
Medicare is complicated. The information in this article just scratches the surface of some of the most common mistakes and misunderstandings we see with enrollments. It’s important to talk with someone who specializes in Medicare insurance as you approach your eligibility. Preemptive measures now can save you a lifetime of difficulties later.
Adam Hyers is the owner of Hyers & Associates Insurance Agency, an independent brokerage in Columbus, Ohio. His agency works all across the country and specializes in Medicare supplements, Medicare Advantage plans, Part D Drug coverage, life, long term care, and annuity policies.