If you’re turning 65 in the next 12 months, I surely don’t have to tell you what your mailbox likely looks like! The mailers and post cards are piled high in some bin to get to later, when you know you have to sit down and think about Medicare.
Or possibly your voicemail is clogged with messages from agents that will enroll you into plans that offer the sun, stars, and the moon for no cost to you. How much better can it get than that?
Or, how much more stressful can it get, I should ask.
We’re here to help you with a few pointers that can alleviate this stressful time for every person in the US turning 65 years old.
Quick refresher. Medicare is the US health insurance option available to those that are eligible for the coverage. That is generally at age 65, but it is also available to those on permanent disability who are not yet 65 years old.
The scope of this article is limited to those turning age 65, however. Medicare insurance through the government will provide 80% of a person’s coverage. The tricky part is “what do you do to cover the rest,” since there is no dollar limit on what that 20% could amount to.
Locate a Guide Prior to Turning 65
One of the best things that you can do for yourself is to “interview,” if you will, a Medicare guide prior to age 65. While you’re in this mode of finding that guide, also determine if you do indeed need to enroll into Medicare at age 65. Many people mistakenly believe that they MUST enroll at age 65, and that is just not the case.
So, while you are determining if you must enroll, also start looking for that person or place that can help you make a mistake-free transition to the Medicare insurance system. The key truly is avoiding mistakes before they happen. Sounds easy, I realize, but it can be done.
Look Beyond Friends and Family
Yes, they are often trying to be helpful, but they should not be the final authority as to what you enroll into. Your friends and family will make mistakes that they will, unknowingly, much of the time pass along to you. Here’s an example.
A client has a sister with higher net worth. Our client called us to ask why his sister (not our client) couldn’t receive care out of state for a new diagnosis. The answer was simply due to her plan selection when she joined the Medicare system. The response was “but she has money, what can she do now?”
Our answer is “nothing.” Some mistakes are unfixable in Medicare. Pre-existing conditions do matter. You should be aware up front of some of the dangers down the road. She, in this case, didn’t have good counsel, in my opinion. Or she possibly ignored good counsel. Both happen quite often in our space.
Frequency Is Important
Look for an agent that handles a LOT of Medicare. Meaning, they enroll more than one or two people a month. Ask them the following:
- How many cases they place with Medicare products.
- How many carriers they represent for Medicare plans.
- If they perform an annual review with clients.
- How they keep in touch with their clients.
Remember that any agent that has a health insurance license can technically enroll you into a plan. Does that mean that they know what they’re doing? Absolutely not.
Ask your financial planner for a referral. We work with a lot of financial advisors to be that referral source. Many understand the need for good Medicare planning as it relates to your entire financial picture.
Finally, don’t ask your doctor’s office what plan you should choose. Don’t listen to television ads, and don’t listen to what works great for your friend. You are unique, and you need a product that works for you and you alone.
Think of Yourself as the 80-Year-Old You
Right, this may not be quite the most fun tip here! But what I mean is, think beyond today when you are purchasing or enrolling into your Medicare plan.
Our health insurance system has been so focused in the past decade on the fact that “no pre-existing conditions” will affect your purchase of insurance coverage. True in the under 65 marketplace. Not true when you hit Medicare.
It’s a bit backwards, right? You turn 65 years old, parts seem to break down, your eyes need a cataract or two. You start taking Eliquis for some a-fib. It’s not a really big deal because it’s just something you live with.
A little bit of melanoma is removed from your leg. Our medical technology is amazing. All is well according to your brain. Underwriters at insurance carriers have a different idea of health.
For those people trying to change Medicare plans after what we refer to as their open enrollment window disappears, isn’t so easy. You may be stuck with the plan you are in, regardless of whether you now like it that plan or not.
So, what’s the best course of action to avoid that happening in the first place? Understanding all of the pitfalls that MIGHT hit you down the road. Make an educated decision based on your comfort level, your budget, your lifestyle, and your desire for what kind of medical care down the road.
Be that 80-year-old you in your mind for a little bit as you turn 65. Remember that oftentimes your friends and family that suggest Plan A or Plan B often don’t brag about the pitfalls down the road! So be careful in who you listen to.
Pay Attention at Year End
This is an excellent time of year to discuss year-end missteps with Medicare. Medicare monthly premiums in the US are based on modified adjusted gross income.
What this means is that our Medicare system, in 2021, to determine monthly pricing for its beneficiaries, will look to the person’s 2019 tax return to determine what they shall pay monthly in 2021. They will look to the line identified as modified adjusted gross income.
What you do at year end in any given year can impact your Medicare premiums. We received an email recently from a couple that each took a large sum of money out of an IRA account and moved it to a ROTH IRA account in 2019.
They had no idea that there was any repercussion in terms of their Medicare premiums. Each of them received notice that their Medicare premium will double for 2021.
Work with your financial advisor or your CPA on year end strategies to employ if they make sense but be sure to consider the impact on Medicare premiums.
Part D Drug Plan
Other year end strategies include checking your Part D drug plan annually. The last statistic I saw suggested that up to 70% of Medicare beneficiaries do not annually check their Part D plans to see if they are in the best plan for the following year.
Much of the time the comment is “I’m good, it worked well this year.” Because a drug plan worked well in 2020 doesn’t mean that the preferred pharmacy arrangement won’t change in 2021 for the same plan at the same pharmacy.
Mark on your calendar for September 2021 to look for the Annual Notice of Change that will arrive from your insurance carrier for Part D plans or your Medicare Advantage plan. They are required to provide the consumer the information as to their plan changes for the following year.
Don’t just throw that in the ‘get to it later bin’. There are no changing things in January once the change takes place. And, yes, you’re stuck for a full year.
These three simple tips may not seem so simple. And I’d agree; they certainly take a bit of work. But they are impactful when followed. Happy 2021 and cheers to turning 65!
Have you turned 65 yet? What Medicare impactful decisions have you had to made thus far? Have you been able to change any plans that didn’t work as you liked them to? Please share your experiences below!