Healthcare expenses can loom large in retirement. Therefore, failing to totally understand Medicare could be a costly mistake. The Motley Fool’s recent article entitled “3 Medicare Mistakes That Could Wreck Your Retirement” warns that these three mistakes could throw a wrench in your retirement plan. Your estate plan in place and up-to-date is a critical part of an all encompassing retirement plan.
- Thinking that Medicare will cover all your healthcare costs. It’s critical that you understand that Medicare will help cover some of your medical expenses in retirement—but it doesn’t cover everything. You will still be liable to pay all your premiums, deductibles, co-insurance, and co-pays. Medicare Part A usually doesn’t have a premium, but you’ll have a deductible of $1,408 per benefit period. Part B’s standard premium is $144.60 per month with a deductible of $198 per year. Note that Medicare Parts A and B don’t cover prescription drugs or routine vision and dental care. For those things, you’ll have to purchase Medicare Part D or a Medicare Advantage plan at an additional cost.
Here’s another Medicare mistake. It’s also important that you understand that Medicare typically doesn’t cover long-term care, a major expense. Prior to retirement, it’s a good idea to add these costs into your plan.
- Failing to research your plan options each year during open enrollment. Medicare open enrollment is from October 15th until December 7th each year. In this period, retirees can make changes to their plans, such as switching from Original Medicare (Parts A and B) to a Medicare Advantage plan or vice versa. You can also change from one Advantage plan to another or add Part D coverage. After you’ve been on Medicare, you should look into options available to you and shop around to save money.
- Failing to enroll in Medicare when first eligible can be another Medicare mistake. When you become eligible for Medicare, you must enroll during your initial enrollment period (IEP). This begins three months prior to the month you turn 65 and ends three months after the month you turn 65. Failure to enroll could mean a penalty of 10% of your Part B premium. The longer you go without enrolling, the higher your penalty will be, and you usually must continue paying the penalty for as long as you have Part B coverage.
Note that if you’re not ready to enroll in Medicare at 65, you may qualify for a special enrollment period. Medicare mistakes are not always easy to identify.
Say, for example, if you (or your spouse) are still working at age 65 and are covered by insurance through your employer, you can delay your Medicare enrollment until after you quit your job.
Medicare can be confusing. The better educated you are about the program, the wiser decisions you’ll be able to make sure your retirement fund lasts longer.
By avoiding these common mistakes, you can save money and prepare for your senior years.
Reference: The Motley Fool (March 20, 2020) “3 Medicare Mistakes That Could Wreck Your Retirement”
Suggested Key Terms: Elder Law Attorney, Medicare, Long-Term Care Planning, Long-Term Care Insurance, Elder Care, Financial Planning, Retirement Planning