Navigating the Complex and Ever-Evolving Medicare Maze to Optimize Choices & Minimize Costs
by James Lange, CPA/Attorney, Diane Markel, CPA and Elaine Floyd, CFP
This information is particularly critical if you will turn age 65 soon or if you have turned 65 and you haven’t taken the necessary steps to enroll in Medicare.
Medicare has some complex and confusing rules. Not following the rules can lead to punitive penalties—extra costs and possibly fewer choices–that last a lifetime. Do we have your attention? Unfortunately, being uninformed or unaware of the requirements does not grant you any leniency.
A CPA in our office, Diane Markel, did a deep dive into the issue of signing up for Medicare and was astounded to find that most people were making the wrong decisions and it was costing families a lot of money. To make matters worse, a wrong decision is perhaps something you will have to live with for the rest of your life! I asked Diane if someone in our office should develop a level of expertise in this area. She said absolutely not—leave that to specialists in the field—but we can offer recommendations and find wonderful sources of information to share.
We have subscribed to horsesmouth.com, an educational resource for financial professionals. They allow me to distribute the articles they have prepared. Below is a compilation of thoughts and observations from Diane and me as well as some direct excerpts from the horsesmouth.com article written by Elaine Floyd, CFP. Elaine is a smart and meticulous researcher. She has written several books and was a guest on my radio show talking about Roth IRA conversions and Social Security. When she turned 65 and confronted the Medicare enrollment process, she was amazed by the complexity and assigned herself the task of educating financial professionals through her distribution channel, horsesmouth.com.
Being an informed and proactive consumer is absolutely in your best interest. Everyone’s goal should be to understand ALL your Medicare financial and insurance options and enroll at the CORRECT TIME—this is essential to avoid the penalties mentioned above.
The information in this newsletter is vital for those approaching the Medicare milestone. And, while many of our readers will have already navigated the Medicare maze, everyone should reevaluate annually. If you have original Medicare, you should at least review the drug plans. If you have Medicare Advantage you should review your entire plan annually, perhaps with the help of an advisor.
Let us remind you, if you sign up during your initial period or, if you are eligible, during a special enrollment period, you CANNOT be denied coverage REGARDLESS of your health status. The special enrollment period applies to individuals who turn age 65 but are still covered by a group plan (20 or more employees). People in this category can sign up later. But to avoid a lapse in coverage and potential penalties, you will want to sign up before your group coverage ends. These crucial and limited time periods allow you to choose among ALL Medicare options. After these windows have closed, changing a Medicare plan would most likely require medical underwriting, your choices may be limited, and costs could increase.
Here is some advice direct from the horsesmouth.com:
- Whether you are retired or still working, Medicare will likely become part of your life after you turn 65. In the United States today, most health plans pay secondary to Medicare. So, if you are currently covered by a retiree health plan, an individual policy, or a small employer group plan (an employer group plan that covers fewer than 20 employees), you must enroll in Medicare when you turn 65.
- If you don’t, your insurance claims may not be paid. And if you do not enroll in Medicare on time, you will be subject to late-enrollment penalties for the rest of your life. Generally, the only people who are exempt from enrolling in Medicare at 65 are workers and spouses who are covered by an employer group plan that covers 20 or more employees and their time will come later.
To read Elaine’s full article, please go to www.paytaxeslater.com/medicare. We strongly encourage you to read it and share it with friends and family who would also benefit from the information.
The remainder of this Medicare article will be published in the January 2020 issue of Lange’s Advice Column.