Common Medicare Mistakes to Avoid When Turning 65

By Crystal Manning

Recently, I have worked with clients that have made costly mistakes with their Medicare insurance, simply because they were unaware of penalties or other potential traps with Medicare laws. In fairness, there’s no disputing that Medicare particulars are sometimes complicated and overwhelming. However, let’s discuss some common (and costly) mistakes you can easily avoid without exerting too much effort in the process.

Timing is especially important when it comes to enrolling in Medicare. As you approach 65, you will want to enroll during what the government calls your initial enrollment period (IEP). This seven-month period goes from three months before the month in which you turn 65 until three months after.

If you have received Social Security or Railroad Retirement Board benefits for at least four months prior to turning 65, the government will often automatically enroll you in Medicare Part A (hospital insurance) and Medicare Part B (medical insurance) at age 65—with your Medicare card/instructions typically arriving in the mail three months prior to your 65th birthday. The late-enrollment penalty for Part B is 10% for each year you did not have part B and lasts for as long as you have Medicare. You must pick up part B when you personally are no longer working, or you are a dependent of someone who is no longer working.

All other eligible seniors have a seven-month enrollment window to sign-up for Medicare, beginning three months before you turn 65 and ending three months thereafter. You can apply for benefits online or over the phone. If you miss your initial enrollment period, you can sign up during the Medicare General Enrollment Period (January 1-March 31, annually) and your coverage will start on July 1st.

If your spouse is not 65, then they will have to find coverage elsewhere—through an employer, a COBRA plan, or a policy sold on the Health Insurance Marketplace. If your spouse has not turned 65, they may qualify under certain conditions. Anyone who receives disability benefits from Social Security for 24 months or has an end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS), also qualifies for Medicare.

Not having the right Medicare coverage is another potentially costly mistake. While Medicare Part A is usually free, Parts B, C, and D all require a monthly premium. Most people should get at least Part B so that they have coverage for doctor visits and outpatient care. The standard premium for Part B coverage is $164.90 for 2023, (based on income two years prior) which is deducted from your monthly Social Security benefit. There is also an annual deductible of $226 for 2023 for Part B coverage. If you do not receive a month's check form social security, you will receive a quarterly bill.

Choosing the right Medicare plan can be confusing, and it may be difficult to interpret all the language written into these plans and options. The type of Medicare coverage you choose depends on factors such as your health care needs, the insurance your doctors accept, where you live, whether you travel often and your financial situation.

It is best to discuss your needs with a licensed Medicare Advisor. If a Medicare Supplement plan (also known as a Medigap policy) is right for you, keep in mind that insurers who offer such policies cannot deny you coverage or charge you more for any preexisting condition when you first enroll in Medicare. However, adding a Medigap policy outside of your initial seven-month enrollment period may cost you more overall; even worse, insurers can deny you coverage based on your health status.

While Medicare Part D is optional, if you go without credible prescription drug coverage for more than 62 consecutive days after you are first eligible, you will need to pay a late enrollment penalty once you do in fact enroll. This penalty is permanent and depends on how long you lacked Part D or credible prescription coverage. So please remember to sign up for a prescription drug plan, even though you may not be taking prescriptions.

Even when you have job-based insurance, some employers, depending on their size, can designate Medicare as your primary health coverage when you turn 65. And if you have retiree coverage or COBRA, those are considered secondary coverage. Check with your Medicare advisor to be sure you are making the correct decisions for you. Check if you are contributing to an HAS.

To qualify for an HSA, you cannot have any health insurance other than your HSA-eligible HDHP. Since Medicare Part A and/or B is considered another type of health insurance, enrolling would make you ineligible.

If you have reached the age to enroll in Medicare but want to stay eligible for HSA benefits, you have the option to delay Medicare enrollment. However, this decision will also delay your ability to collect Social Security retirement benefits. If you are already receiving Social Security benefits when you become eligible for Medicare, you are automatically enrolled in Medicare Part A; it is important to note that you cannot decline Part A while collecting Social Security benefits. To be eligible for an HSA, you need to delay Social Security benefits, thereby allowing you to decline Medicare Part A.

If you decide to enroll in Medicare after delaying it, you should stop contributing to your HSA at least six months in advance. Otherwise, you may be hit with a tax penalty because Part A of Medicare provides six months of retroactive coverage upon enrollment.

 Other misconceptions on Medicare are that many people incorrectly assume Medicare covers long-term care. The truth is that it does not, except in limited circumstances. Medicare plans cover skilled nursing care with certain conditions, but the patient must be receiving Physical therapy.

Although Medicare plans cover many of the medical costs for its enrollees, you need to be prepared for sometimes substantial out-of-pocket costs if they apply. Understanding Premiums, Deductibles, co-pays, co-insurance and out of pocket maximum can help you make an educated decision on the plan that is right for you.

One last concern for many is the cost of Medicare or Medicare plans. If you have a limited income, you may be able to get assistance with your health costs through certain programs. Extra Help is a federal program that helps pay for some to most of the costs of Medicare Part D prescription drug coverage. Contact your local State Health Insurance Assistance Program (SHIP).

Contact Crystal Manning, Licensed Medicare advisor, for a free one-to-one consultation at (412) 716-4942 or crystalmanning33@gmail.com to avoid any mistakes with Medicare.