The 10 Most Expensive Medicare Mistakes You Can’t Afford to Make

Mistake #1 – Assuming Medicare covers 100% of your health care expenses

Original Medicare (Parts A and B) has copays, deductibles, coinsurance, and other costs that can add up in a hurry.  For example, Medicare Part B usually pays only 80% of allowable covered charges, while you pay for the other 20%.  Imagine paying 20% of chemotherapy for a prolonged period of time? Ouch!

To make matters worse, there is no cap, ceiling, or limit on the dollar amount you pay out of pocket.  This is one of the largest contributing factors on why so many seniors file for bankruptcy* and end up on Title 19.  The best way to limit your financial exposure is to purchase a Medicare supplement/Medigap policy or a Medicare Advantage Plan.

The risk of not doing so can be astronomical!  It’s also important to know that Medicare doesn’t cover everything.  Some of the items and services not covered include:

  • Long-Term Care (also called custodial care)

  • Most dental care

  • Eye exams related to prescribing glasses

  • Dentures

  • Cosmetic surgery

  • Acupuncture

  • Hearing aids and exams for fitting them

  • Routine foot care

*Approximately 65% are Medicare-related according to CNBC

 

Mistake #2 – Thinking Medicare Is Totally Free

Although Part A is free, if you or your spouse paid FICA taxes for at least ten years, the standard Part B premium in 2023 is $164.90 per month.

Notwithstanding, if your modified adjusted gross income is substantially higher than that of the average American, you could end up paying as much as $578.30 per month.  In effect, you are penalized for making a lot of money.

Medicare Part C, a.k.a. the Medicare Advantage program, is voluntary.  If you decide to enroll in Part C instead of original Medicare, you may pay a monthly premium depending on the plan you choose.  However, some Advantage plans may charge you a zero monthly premium, but have copays, deductibles, coinsurance, and other out-of-pocket expenses.  Medicare Part D, also called the Medicare Prescription Drug Benefit, will have a monthly premium cost.  The amount depends on the plan and insurance company you choose.

You should also be aware that there are late penalties if you fail to enroll when you are first eligible to do so unless you have creditable drug coverage from another source.  Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($32.74 in 2023) by the number of full, uncovered months.  In other words, multiply the number of months you’ve been without creditable drug coverage since you enrolled in Part A and or Part B by 0.33.  For example, if you’ve gone 60 months without creditable coverage, your penalty would be 60 times 33 cents or $19.80 per month for as long as you live.

Like Part B, if your modified adjusted gross income is substantially higher than the rest of us “average Americans,” you will pay an income-related adjustment. In plain English, you’ll pay more than the rest of us.

 

Mistake #3 – Preexisting medical conditions can be a problem

Although preexisting medical conditions won’t matter when you initially enroll in Medicare, they do matter when it comes time to purchase supplemental coverage.

Medicare supplement plans, also known as Medigap policies in most states (including Florida), do not have to accept you unless you apply during your one-time initial enrollment period (IEP) which begins three months before the month you turn age 65 and ends three months after the month you turn 65, lasting for seven months in total.  During this period, you can purchase any Medigap policy sold in the state you live in even if you have chronic health problems.

During your IEP, you will generally get better prices and more choices to choose from.  If you miss your seven-month IEP, you will in all likelihood have to go through medical underwriting, which can be problematic.

Make sure you know and understand the rules or else you could end up in real trouble.  That’s why it’s critical to seek advice from a licensed professional agent that specializes in Medicare.

 

Mistake #4 – Missing your initial enrollment period

If you miss your IEP, you could be subject to a Part B late enrollment penalty of 10% for every 12-month period you fail to enroll in Medicare Part B once you are eligible.  There are exceptions if you or your spouse are still working for an employer with 20 or more employees that provides medical coverage.

Confused?

Here’s a Medicare tip: It’s easier to hire an expert than become one.  Don’t go it alone.

 

Mistake #5 – Failure to review your coverage each year

Medicare Advantage Plans and Part D prescription drug plans vary their benefits and coverage almost every year.  Changes in cost, copays, premiums, doctors, hospitals, medications, and networks may negatively affect your coverage and your finances.

At Integrity Insurance, we review our client’s coverage annually to make absolutely sure they have the best plan available.

 

Mistake #6 – Assuming Medicare pays for a prolonged nursing home stay. It doesn’t.

Although Medicare does provide up to 100 days of coverage in a skilled nursing home facility when medically necessary, it does not cover costs associated with an assisted-living facility, custodial care, or help with normal activities of daily living.

Since monthly costs for a nursing home can exceed $8,000, you should seriously plan for such a contingency; otherwise, you could end up broke and on Title 19.

Once again, seek professional help.

 

Mistake #7 – Failure to enroll in Medicare Part D prescription drug coverage without having creditable drug coverage from another source

Even though Medicare Part D enrollment is “voluntary,” you are asking for trouble if you don’t enroll once you are eligible.

Suppose you did not enroll in Part D, and years later, you are diagnosed with a chronic disease that requires very expensive drugs.  First of all, you can only enroll in Part D during certain times of the year, so you could be stuck paying for costly drugs for months out of your own pocket.  Even worse, once you do enroll, there’s that 1% penalty per month mentioned in Mistake #2.

Mistake #8 – Failure to ask your physician’s staff the right questions

Most Americans rarely understand the difference between Medicare Advantage and Medigap plans, let alone the staff working at your doctor’s office.  

It’s extremely important to find out if your doctor participates in your specific Advantage plan; otherwise, you might end up paying the bill out of your own pocket.  Medicare Advantage plans vary by insurance company, ZIP code, and networks.  Do you have a PPO or an HMO? These types of questions must be clarified before you walk into your doctor’s office.

 

Mistake #9 – Failure to submit proof of creditable coverage

When you retire from your job and no longer have access to your company’s health insurance plan, watch for your creditable coverage letter in the mail.  This letter is very important if you delayed enrollment in Medicare Parts B and D because you were still working.  It serves as proof that you will not have to pay late enrollment penalties. 

See Mistakes #2 and #4.

The proof of creditable coverage letter is a big deal, so don’t lose it; you will need it down the road to give to your new Part D prescription drug plan provider.

 

Mistake #10 – Trying to go it alone

My wife and I love to travel.  We have been just about everywhere on Planet Earth, including the North Pole. How wise would I be if I took off for 90° north without a guide? I doubt I would still be around to write about our adventures.

Whenever we travel to a foreign country or an unfamiliar location, we take a guided tour or hire our own tour guide ahead of time.  It makes our vacations easier to navigate and far less stressful.

I would submit to you that working with a licensed sales agent who specializes in Medicare would give you the same gratification and peace of mind.  Doing otherwise is just not worth the risk.

I leave you with one of my favorite quotes:  “A mountain climber who disclaims the aid of a guide can expect no other epitaph than that he deserves the penalty of extreme folly!”    – Arthur Crump

 

Here’s 4 More Bonus No-No Medicare Mistakes to Avoid

#1       Choosing a Part D prescription drug plan because your friend or family member chose it

You should pick a plan according to the specific drugs you take – not somebody else’s.

#2       Not checking to see if you qualify for financial assistance

            There are federal and state programs to help those who need help paying for their medical expenses and prescription drugs.

#3       Not realizing you need to enroll in Medicare Part B if you have retiree or COBRA health coverage

There are penalties for not enrolling in Part B once you are required to do so.

#4       Failing to read your Annual Notice of Change

This very important document comes in the mail each September if you’re enrolled in a Medicare Advantage plan (HMO or PPO) or a Part D prescription drug plan.  It specifies what changes the plan will make in its costs and coverage for the following year.  You can then compare it with other plans during open enrollment (October 15 to December 7) and switch if you want. Failing to read the notice can result in nasty shocks on January 1 if you stay with a plan that no longer meets your needs.

 

No one, and we mean no one, ever said understanding Medicare was easy!

 

Richard Everett, “Mr. Medicare”