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How Advisors Can Help Clients Avoid Costly Medicare Mistakes

Healthcare is one of the most expensive things you can spend your money on. It is also an expense that you will likely incur at some point in your life, no matter how healthy you are. The high cost of medical treatments, drugs, equipment, long-term care, etc., are all significant expenses you need to plan for. The increased demand for healthcare services and the limited supply of healthcare providers can also drive up costs. Therefore, it is essential to save on healthcare costs.

Unexpected medical expenses can arise at any time and having a safety net can help you pay for these costs without incurring debt. Having funds set aside for healthcare can also give you more control over your healthcare choices, allowing you to access better doctors, treatments, and aftercare. Additionally, as healthcare costs are likely to continue to rise due to inflation, preparing in advance through savings can help protect you from financial strain in the future.

Medicare can be one way to do this. Medicare is a federal health insurance program for people aged 65 or older in the United States. It can also be used by some people under 65 with specific disabilities or conditions. Medicare can cover the cost of hospital stays, doctor visits, and other medical services. However, as with any other insurance plan, it is funded by premiums paid by the beneficiaries. Therefore, it is vital to make sure you choose the best plan and lower your costs. Hiring a professional financial advisor to help with Medicare advisory services can be helpful to save money while ensuring maximum financial protection.

Read below to learn common medicare mistakes and how an advisor can help you avoid them.

What are some of the mistakes that you can make when it comes to Medicare?

1. Not understanding the various Medicare parts

Medicare can be an intricate health policy with several parts and sub-parts. Hiring professional Medicare advisory services can help you understand that there are four general parts, namely, A, B, C, and D, and other supplementary parts, namely F, G, K, L, M, and N. Here's how this works:

1. Medicare Part A (Hospital Insurance):

Part A covers inpatient hospital stays, healthcare at a nursing facility, hospice, and other similar care services. This Part of Medicare is usually premium-free for those who have worked and paid Medicare taxes for at least ten years. Part A covers a limited stay in a skilled nursing facility and home health care but does not cover long-term custodial care, such as in a nursing home.

2. Medicare Part B (Medical Insurance):

Part B covers medical services and supplies that are medically necessary to treat a health condition. This includes physician services, preventive services, durable medical equipment, laboratory tests, and other diagnostic procedures. Part B is usually paid for by a monthly premium and a deductible, and it covers 80% of the approved amount for covered services, with the patient responsible for the remaining 20%.

3. Medicare Part C (Medicare Advantage):

Part C, also known as Medicare Advantage, is offered by private insurance companies in a contract with Medicare. It provides all Part A and Part B benefits, along with additional benefits, such as vision, dental, and hearing coverage. Part C plans usually have a network of providers and may require you to choose a primary care physician. Some Part C plans also have a maximum out-of-pocket limit, which sets a limit on how much you pay for covered services in a year.

4. Medicare Part D (Prescription Drug Coverage):

Part D covers prescription drugs and is offered by private insurance companies in a contract with Medicare. It helps to pay for both branded and generic drugs and is designed to help lower the cost of prescription drugs. Part D is optional, but those who choose to enroll in it pay a monthly premium and an annual deductible, as well as a copay or coinsurance for their prescriptions.

Medicare professional advisors can help you understand these parts and their coverage in detail and plan your healthcare needs optimally. 

2. Not enrolling on time

One of the biggest mistakes you can make is not enrolling for Medicare on time. You are automatically enrolled for Medicare part A if you are receiving your Social Security benefits or Railroad Retirement Board benefits for at least four months before you turn 65. Additionally, you will also be automatically enrolled for Part B at the age of 65. Part A will offer you hospital insurance, and Part B will provide you with medical insurance.

However, if you do not fall in the above category, you will have to sign up for Medicare yourself. You will have an enrolment window of seven months, starting from three months before you turn 65  up to three months after. A financial advisor can help ensure that you enroll for Medicare during this time. Retirees can enroll online or over the phone, based on their convenience and preference.

Additionally, if you happen to miss the initial enrollment, the financial advisor can help you enroll later during the Medicare General Enrollment Period. This starts on January 1 and is open till March 31 every year. When you select this option, your coverage will begin on July 1 of the same year. However, it is crucial to keep in mind that if you do not enroll in the initial window and do not qualify for free Part A premiums, your monthly premium can increase by 10%. Further, you would be levied with a late enrollment penalty. This is equivalent to twice the number of years you did not sign up for Medicare after you became eligible for it. So, if you enroll for Part A one year later, you will be charged a higher premium for two years. If you were late by two years, you would be charged with a higher premium for four years, and so on.

Similarly, you would have to enroll for Medicare Part B on time if you do not have creditable coverage from another insurance plan. This can be done during the initial enrollment period or the Medicare General Enrollment Period. If you do not enroll for it, you will be charged a 10% monthly premium for every year you did not enroll for Part B.

Although an optional plan, Medicare Part D also has an enrollment period. You must enroll for Medicare Part D during the Initial Enrollment Period or the Annual Enrollment Period from October 15 to December 7 every year. You can enroll through a private insurance company. Keep in mind that Medicare Part D offers coverage against the costs of branded and generic drugs, which is why it can be necessary even if it is not mandatory. Moreover, in the absence of proper prescription drug insurance coverage for more than 62 days, you will be charged a late enrollment penalty after you are eligible for enrollment.

Hiring the right Medicare professional advisors can help you understand these penalties and enrollment rules better and take timely action to avoid any late penalties.


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3. Assuming Medicare covers long-term care

Long-term care is a type of custodial care that is provided to help patients in their daily lives. It can include assistance with activities such as bathing, dressing, sitting, walking, and using the bathroom, among others. This type of care is typically provided in a nursing home or at an assisted living facility. Most older people require long-term care after a certain age or due to a terminal or critical illness.

A lot of people assume that Medicare can be used to cover long-term care. It is essential to know that Medicare generally does not cover long-term care. However, Medicare Part A does cover a limited stay in a skilled nursing facility for post-hospital rehabilitation and other medically necessary reasons. Further, Medicare Part B covers certain home health services, such as physical therapy and nursing services, but it also does not cover long-term custodial care.

There are other options for individuals who need long-term care, such as long-term care insurance plans. These policies can be bought separately to cover your future needs. The insurance premiums may be costly. However, there is a significant gap between patients' needs and the availability of long-term care in the country. There are very few caregivers out there, which further increases their demand and cost. Therefore, buying long-term care insurance may be the only solution here.

A health insurance financial advisor can help you select a suitable long-term care plan and prepare for your future needs. It is also advised to compare multiple plans before picking the most cost-effective one.

4. Not understanding how COBRA and Medicare work

Consolidated Omnibus Budget Reconciliation Act (COBRA) is a type of health insurance that is given to you when you leave your job. COBRA allows you to stay with your former employer's health insurance plan, even if you are no longer working with them. COBRA coverage can be used for up to 18 or 36 months, depending on your situation. It is essential to know how COBRA and Medicare work together to avoid confusion later. Here are some things to know in this regard:

You can use COBRA and Medicare together. However, you should have already enrolled in Medicare at the time you were eligible for COBRA. On the other hand, if you have not registered for Medicare but become eligible for it while being enrolled in COBRA, your COBRA coverage will stop.

The bottom line is that COBRA can be used to supplement your Medicare coverage and save money. But it all boils down to when you enroll for it. It is important to remember that you have 60 days to take up COBRA after you quit your job. Therefore, make sure to assess your budget, health issues and medical needs, financial responsibilities, existing Medicare covers, and other factors to pick the best option.

How to pick the best professional advisors for your Medicare needs

When looking for an advisor, it is crucial to consider the following factors to help you find the best one for your needs:

1. License and credentials: 

Look for an advisor who is licensed and has the proper credentials.

2. Experience:

Choose an advisor who has experience working with Medicare and helping people enroll in the program. Medicare rules can be complex and confusing. Someone with optimal expertise is likely to have a good understanding of the different parts of Medicare and how they work.

3. Fees:

It is essential to understand the fee model of the advisor and pick someone you can comfortably hire without upsetting your monthly budget. You can choose from a fee-only Medicare advisor or an hourly rate or commission-based advisor. The choice is yours, but make sure you understand their differences thoroughly. 

4. Reviews:

Check online reviews and ask for references to determine the Medicare advisor's reputation and track record of success, disputes, professional ethics, and more.

5. Communication:

Choose an advisor who is open to communication and someone you feel comfortable working with.

6. Book a consultation:

You can schedule a consultation with several different Medicare advisors and ask questions about their experience, approach, and the services they offer. This can help you narrow down your search and make an informed decision to find the best Medicare advisor for your needs.

To summarize

To avoid costly Medicare mistakes, it is vital to enroll in Medicare as soon as you become eligible. Try to understand the different parts of Medicare (A, B, C, and D) and the coverage they provide, and take care to educate yourself about potential penalties for late enrollment. Compare and choose the right Medicare plan and examine it with respect to COBRA, and stay informed about any changes in Medicare coverage. You may also consider buying long-term care insurance to cover your future needs to avoid being left out of adequate financial protection in your hour of need. If planning for your Medicare needs seems overwhelming, consider working with a reputable and experienced Medicare advisor who can help you navigate the program and make informed decisions about your healthcare coverage.

Use the free advisor match service to find suitable Medicare professional advisors to help you understand how Medicare works. All you need to do is answer a few simple questions on your financial needs, and the match tool can help connect you with 1-3 advisors that are best suited to help you reach your financial goals and requirements.

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The blog articles on this website are provided for general educational and informational purposes only, and no content included is intended to be used as financial or legal advice.
A professional financial advisor should be consulted prior to making any investment decisions. Each person's financial situation is unique, and your advisor would be able to provide you with the financial information and advice related to your financial situation.