There are so many mistakes you can make when signing up for Medicare. Some of these mistakes can be tacked onto your monthly premiums forever! Avoiding these missteps will help you to save money on medicare.
Many people don’t know that they need to pay for Medicare at all! After all, you’ve seen those deductions knocked off of your paychecks for years. Although there are usually no monthly premiums for Medicare Part A, there is a monthly premium for Medicare Part B. Additionally, you’ll need Medicare Part D for prescription drug coverage and possibly a Medicare Supplement Plan to help bridge all of the gaps! With so many decisions to make, it is very easy to make costly mistakes. However, if you do your research, you can avoid many of these mistakes and therefore, save money on medicare!
Medicare.gov is an excellent source for the most comprehensive Medicare information, but it can be quite overwhelming. The easiest and most fool-proof way to avoid these extra costs is to work with a licensed broker. A broker will serve as a third party liaison to help you navigate the world of Medicare and find the right plans for you at the lowest price. One of the first things a broker can help you with is understanding out of pockets costs.
Understand Your Out of Pocket Costs
Whether you choose Original Medicare alone, with a Supplement Plan or Medicare Advantage, there are certain out of pocket costs that you should be aware of. Costs like:
No matter what route you go, you will be responsible for some of these charges. While one plan may boast lower premiums, their copays could be through the roof. Another could waive the deductible, but there may be hidden costs. For this reason, it is very important to understand basic terminology.
PREMIUM: Your premium is what you pay to keep your insurance active. Usually this is billed on a monthly basis. For Medicare Part A, there are usually no monthly premiums. For Medicare Part B, the premium is determined by your income. The premiums for Medicare Advantage, Medicare Part D, and Supplement plans vary from carrier to carrier. Some offer very low premiums but this cost savings is usually offset by much higher deductibles, copays or coinsurance. A plan with a low premium may save you money if you are fairly confident you will not use your insurance regularly, but it may cost you in the long run, if you have unexpected medical needs.
DEDUCTIBLE: Your deductible is the amount you pay out of pocket before your insurance “kicks in” so to speak. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself. After you pay your deductible, you will usually pay only a copayment or coinsurance for covered services. Your insurance company pays the rest. Some plans will cover certain preventive services before you meet your deductible. Generally, plans with lower monthly premiums have higher deductibles. Plans with higher monthly premiums usually have lower deductibles.
COPAY: Once you have met your deductible, you will only be responsible for either a copay or coinsurance. These are different things! A copay is a fixed amount for a given medical service or prescription. For example, your copay for a doctor’s visit may be $20, a specialist, $30, and urgent care $50. Very often, these are printed right on your insurance card. You are responsible for these copays at the time of service.
Make Sure to Enroll On Time to Save Money on Medicare
Enrolling too late can cost you in a couple of ways. An easy way to save money on medicare is to enroll on time!
MEDICARE PART B:
When you first turn 65, you will most likely be automatically enrolled in Medicare Parts A & B. At this time, you will enter into your individual open enrollment period. This will be the three months before, the month of, and the three months after your 65th birthday. Nowadays, many people are choosing to work past 65 and defer Medicare (namely Medicare Part B). If you choose to defer Medicare, you must make sure to do so through the proper channels. Make sure to return the card per the instructions on the back of the card. If you keep the card, you will keep Medicare Part B and you will be charged for it!
Additionally, if you defer Medicare Part B, you must make sure to maintain creditable coverage. You’ll also need to re-enroll in Medicare Part B within eight months of the termination of your coverage or you will be charged a late penalty. This will be tacked onto your monthly premiums forever and is certainly a needless expense.
MEDICARE PART C & MEDICARE PART D:
There can also be a late penalty associated with prescription drug coverage. You have two options for prescription drug coverage with Medicare: Medicare Advantage (also called Medicare Part C) and Medicare Part D. Your individual open enrollment period for Medicare Advantage and Medicare Part D is the same as for Original Medicare (Parts A &B). This would be the three months before you turn 65, the month of your birthday and the three months after. You may owe a late enrollment penalty if, for any continuous period of 63 days or more after your initial enrollment period is over you are without prescription drug coverage. After that, the charges will stack up for every month that you are without coverage.
Like Original Medicare, you may qualify for a special enrollment period if you maintain creditable coverage. Your special enrollment period begins month the plan notifies you that you don’t qualify and ends two full months after the month of notification. After that, the late fees will begin to stack up. Again, a needless expense: save money on Medicare by thinking ahead!
Pick the RIGHT Supplement Plan
There are a variety of Medicare Supplement Plans available with different coverage levels. The first thing you need to determine is exactly what your coverage needs are and compare that with the costs. It is important to enroll in a plan that matches YOUR coverage needs. If you choose a plan with too little coverage, you may end up with large out of pocket costs. If you pick a plan with too much coverage, you’ll pay higher premiums for services not used.
You can also rack up some extra costs by waiting too long to enroll in a supplement plan. You can enroll in a Medicare Supplement plan (aka Medigap Plan) at any time. However, you are only guaranteed enrollment with no medical underwriting during your individual open enrollment period. For Medicare Supplement Plans, your individual open enrollment period is the six months after you have turned 65 and have enrolled in Medicare Part B. After that period, you may be subject to medical underwriting and therefore denied based on your health. This could force you to enroll in a different and possibly more expensive plan.
Please remember, Medicare supplements are standardized. So, you will receive the same coverage regardless of the insurance company. Despite this, there is a wide range of prices based on the insurance company you choose. A more expensive company does not mean better coverage. Additionally, if your doctor accepts Medicare, they accept your Supplement regardless of who your carrier is.
Pick the Right Prescription Drug Coverage Plan
Medicare Part D and Medicare Advantage can be a little more complicated than Medicare Supplement plans. The benefits and copays can vary widely dependent upon the carrier you choose. You can check out all of the plans on Medicare.gov by using the plan finder. However, because there are so many options, we really recommend working with a broker. We’ll talk more about brokers vs. agents momentarily. Additionally, unlike Medicare Supplement plans, you cannot change Medicare Advantage or Medicare Part D plans year round. You can only switch or drop a plan during the annual enrollment period which is every year from Oct. 15th-Dec.7th. So, if six months into your plan, you discover it is not the right plan for you, you may be stuck with it until the annual enrollment period.
A Broker Can Help You Save Money on Medicare
This is a big one! Many people are under the false assumption that they will get a better deal by working directly with a carrier (speaking with an agent instead of a broker). This could not be further from the truth. A carrier’s agent will only help you shop plans offered by that specific carrier. A broker can help you shop plans offered by multiple carriers to find the best plan at the best possible price.
Also, prices are fixed by law. You pay the same price whether you use an agent, a broker, or by calling the company directly. Any type of commission is already calculated into the regulated rate. When you use a broker, you have an impartial third party to help you navigate between carriers. That broker works for you, not the insurance company. If you call the company directly, you lose that third party because the agent you speak to works for the insurance company, not you. You’ll save not only money, but time and hassle working with a broker and you can’t put a price on that! BUT, if you want to research on your own, make sure to check out the plan finder on Medicare.gov so you can compare and contrast all of the different plans available.
Lower Your Monthly Premiums
If all else fails, there are a few ways you can save on your premiums.
MEDICARE PART B: Your Medicare Part B monthly premium is calculated based on your income. However, that income is based on your taxes from the two years prior. If your income has decreased since then, you apply for a reconsideration using form SSA-44.
MEDICARE PART D: You can also apply for a low income subsidy specifically for Medicare Part D. For that you will need form SSA-1020.
If you have any questions or concerns, please feel free to give us a call at (888) 918-0518 or schedule a call today. Remember, we work for you, not the insurance company and we do it at no charge! Should there be any confusion down the line, we will handle it for you. Also, check out our youtube channel for more helpful videos.
Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.