Blog — Page 15

The 5 Most Common Medicare Mistakes You Can Avoid.

July 30, 2015 by Frank West

Millions of Americans are currently enrolled in Medicare – and more than 10,000 new members sign up every day. Unfortunately, many of them fall into costly – and sometimes irreversible – pitfalls when they enroll.

The good news is the most common Medicare mistakes are easy to avoid if you know what to look for…That’s why we compiled this short list of the most common Medicare mistakes to avoid. Take a look…

List of 5 Common Medicare Mistakes

Common Medicare Mistake No. 1: Not opting for “Extra Help.”

There are billions of dollars devoted to programs to help retirees pay for their prescriptions, health insurance premiums, deductibles, and coinsurance. If your retirement income is thin, find out if you qualify for assistance.

According to the official Social Security website, “Medicare beneficiaries can qualify for Extra Help with their Medicare prescription drug plan costs. The Extra Help is estimated to be about $4,000 per year.”

Bottom Line: A little research into the “Extra Help” qualification could save some serious cash.

Common Medicare Mistake No. 2: Signing up at the wrong time.

Signing up for your Medicare plan too soon or too late can result in serious penalties. According to MyMedicareMatters.org, during your initial Medicare enrollment – the first time you sign up for the program – you can sign up for parts A, B,C, and D:

During the three months before your 65th birthday;
The month of your birthday; and
The three months following your 65th birthday.

There can be long-term, irreversible effects of not signing up properly. The penalty rates vary. For example, the penalty for Part D late enrollment is equivalent to 1% of the cost of a standard Medicare drug plan premium for every month the enrollee delays enrollment. A May 5, 2013, Forbes article outlines how that penalty can play out…

Say a standard Medicare drug plan premium costs $46.00. One percent of that is $0.35. If a new enrollee forgot to sign up for coverage until his or her 66th birthday, that comes out to $4.20 in accrued penalty fees ($0.35 x 12 = $4.20).

The amount is tacked onto the enrollee’s monthly premium for life once he or she finally does sign up.

Bottom Line: Know your enrollment window ahead of time and don’t miss it.

Common Medicare Mistake No. 3: “Guessing” at what is the right plan.

Comparing every single plan available for you and your spouse can be very difficult and time-consuming. Sometimes the specifics of each plan are hard to understand. To the end, people grow frustrated and impatient and end up selecting a plan without thorough comparison.

But this isn’t something you should leave to guesswork. According to a June 10, 2015, article posted on the National Council of Aging’s website, someone about to select his or her plan should, at a minimum, answer the following four questions:

Do I have health insurance from another source?
Do I have any chronic conditions?
Which doctors and hospitals do I use?
Which prescriptions do I need and what pharmacies do I get them from?

Your answers will help you more quickly and accurately narrow down which Medicare plan is right for you.

Bottom Line: Don’t guess when it comes to choosing your plan.

Common Medicare Mistake No. 4: Ignoring Part D because you don’t take any prescription drugs.

Many people think, “Why pay Part D premiums if I don’t take prescription medicine?” The answer to this question is simple: Chances are you’re not psychic, so you don’t know what the future holds.

You may fall ill or get injured. And when you do, Part D provides coverage, but only the coverage you signed up for during the enrollment period. That means if you don’t have prescription coverage, you’ll have to wait until the next open enrollment (up to a year later) to make any adjustments. A March 7, 2014, AARP article advises readers to pick a plan according to the specific medications they’re currently on. And if you aren’t on any current medications, choose a plan that meets your current needs, as well as those you think may be in your foreseeable future.

Bottom line: Always have prescription coverage.

Common Medicare Mistake No. 5: Choosing Medicare plans solely based on premium amounts.

When comparing plans, investigate and learn about all out-of-pocket costs, not just the premium amount. Such costs include deductibles, co-payments, and more.

You see, while zero or low-premium plans seem attractive, expenses can show up elsewhere come time to pay the bill – and they prove ultimately more costly than a higher-premium plan.

Bottom Line: Study the components of each plan carefully, then decide what’s right for you

Benjamin Franklin

July 28, 2015 by Frank West

Image result for ben franklin

Filed Under: Uncategorized

Medical Insurance Humor.

July 28, 2015 by Frank West

Image result for health insurance jokes cartoons

Filed Under: Health Insurance Tagged With: independent insurance agent

More Insurance Jokes.

July 28, 2015 by Frank West

Image result for health insurance jokes cartoons

Filed Under: Health Insurance Tagged With: Health Insurance Self Employed

5 Life Insurance Types to Know.

July 27, 2015 by Frank West

Whether you need life insurance or not is generally a relatively simple decision to make. But there are many life insurance types, and deciding which one will serve you best can be more complicated. Here’s a handy introduction to the five main types of life insurance: term, whole, universal, variable, and variable universal.

Why life insurance?
Let’s start, though, with a quick review of why you might need life insurance in the first place. Obviously, you might need it if you have young kids and a spouse and want to provide for them in case you die and aren’t around to do so yourself. But life insurance is also valuable if you have any other people who depend on you financially — or might in the future — such as parents or nieces or nephews or a disabled loved one. For that reason, single or childless people shouldn’t quickly assume that they don’t need life insurance.

You might also get life insurance that can pay off a mortgage should you die, or that can keep your business running for a while once you’re gone or that can pay any estate taxes or funeral expenses that materialize upon your death. (Of course, for some of these reasons, you might just accumulate money in a separate fund, bypassing insurance.)

It’s worth noting that come tax time, the payout (“death benefit”) is received tax-free by the beneficiary, as death benefits in general are, for all types of life insurance. An exception would be if you owned a life insurance policy on yourself, with proceeds becoming part of your estate. If so, then they might be subject to an estate tax.

With that out of the way, it’s time to jump into the types of insurance. Note that each of them is sometimes referred to by a different name, so focus on the description of each. Whole life insurance, for example, may be called ordinary life insurance, and universal life insurance might be called adjustable life insurance.

Term life insurance
Term life policies are often chosen by insurance consumers because they can make the most sense. As its name suggests, a term life insurance policy remains in force for a specified term — often 10 to 30 years. Thus, it won’t necessarily cover your entire life — but by age 60 or 80, you may not really need it anymore, with your children grown and your retirement nest egg established.

Term life insurance also tends to be simpler and significantly less expensive than other life insurance types. In part, that’s because it offers a death benefit should you die during the policy’s lifetime, and little else. Term life policies generally offer the most insurance coverage for your buck, because the policies aren’t offering you many other features.

Premiums for term life policies are often fixed at first, for a certain period, and then they start rising. There are many variations of term policies, though. For example, you might be able to opt for fixed premiums, in exchange for a death benefit that decreases as you age. Many policies let you renew for additional years, usually at a higher cost, and some let you convert the policy into a whole life insurance policy.

Considering that the Society of Actuaries has estimated that 39% of whole-life policies are terminated within the first 10 years, getting a term policy is an even more appealing option.

Whole life insurance
Another widely used kind of life insurance is the whole life policy. It’s designed to last for your entire life and usually features a lot of certainty: You’ll have fixed premiums and a specified death benefit. And along with that, you’ll accumulate a cash value account that serves as an “investment” component to the policy. The longer the policy is in force, the more money accumulates in the cash account — on a tax-deferred basis and according to a schedule. If you stop paying premiums before you die (or before age 95 or 100, when many policies let you stop paying), you’ll lose out on the death benefit, but you can claim the cash value.

In addition, many whole life policies will pay you dividends that will effectively reduce the cost of your premiums. Some policies will let you use the cash that has accumulated in your account to pay your premiums, too.

The next three life insurance types are variations of whole life insurance.

Universal life insurance
Universal life insurance also involves a cash-value account growing over time, but it does so in a different way, based on prevailing interest rates (and typically guaranteed to not fall below a particular point). It’s also very flexible, permitting the policy holder to adjust, over time, the premiums, cash accumulation, or term of the policy. If you find you need or want more coverage later in life, for example, you can get it. Or if you want to pay less for less coverage, you can opt for that, too.

Variable life insurance
With variable life insurance, the policy has two parts — one is a general account intended to cover the insurer’s obligations and the other an investment account, where the policy holder gets more choices regarding how money in the account is invested — for example, perhaps being able to invest through one or more stock mutual funds, bond mutual funds, or money market funds, or a combination of them. This increases the upside of the account, but also adds more variability to the cash account and also the death benefit.

Variable universal life insurance
Variable universal life insurance is a combination of universal life and variable life, permitting adjustments in the premiums, death benefit, and investment options. The death benefit may fluctuate in value depending on the performance of the underlying investments — though insurers will typically have a floor below which it can’t fall. These policy holders bear more risk, in return for a chance at higher returns.

It’s worth noting that with the insurance policies that have investment components, you might consider passing that component up and simply investing your own money in funds or other investments you choose yourself. That can be a less expensive way to invest, giving you ultimate control and flexibility, and it can permit the dollars you do allocate to insurance to buy you more insurance.

Whichever of the life insurance types that you select, be sure to choose a strong, highly rated insurer. If you’re quoted a great price by a company you’ve never heard of that ends up going out of business in a decade, you’ll be wishing you’d gone with a top-rated outfit instead.

Filed Under: Life Insurance, Term Life Insurance, Universal Life Tagged With: Term Life Insurance

SSDI: Still on track to go broke in late 2016.

July 27, 2015 by Frank West

Managers of the fund that supports the Social Security Disability Insurance (SSDI) program say it’s still on track to run dry in “late 2016” — around election time.

The trustees of the SSDI trust fund and the main Medicare Part A hospitalization trust fund talk about the funds’ finances in new annual reports.

The SSDI program should take in enough revenue to cover about 81 percent of claims if Congress makes no changes, the trustees say. SSDI’s reserves now amount to less than 40 percent of the program’s annual costs, the trustees say.

The actual results could be worse than the projections, because the trustees assume that real, inflation-adjusted interest rates on fund assets will be about 2.4 percent to 3.4 percent. The average inflation-adjusted rate for the 10-year period ending 2012 was just 1.33 percent.

The actual real interest rate on fund assets was negative 0.75 percent in 2011 and positive 0.32 percent in 2012, the trustees say.

“These swings partly reflect volatility in energy prices,” the trustees say.

The trustees of the main Medicare hospitalization fund say that fund will be empty in 2030. The trustees gave the same Medicare fund depletion date a year ago.

If Medicare Part A costs are high, the fund could be empty as soon as 2022, the trustees say.

When the Medicare Part A trust fund runs out, the program could collect enough tax revenue to pay about 86 percent of its claims.

The Medicare Part B physician services and Medicare Part D drug programs rely on premiums for a given year to pay the claims incurred during that year and do not use the kinds of large trust fund programs that the SSDI and Medicare Part A programs use.

Over a 75-year period, the Medicare Part A fund’s actuarial deficit should amount to about 0.68 percent of taxable payroll, down from a projection of 0.87 percent of taxable payroll given a year ago. The fund looks better partly because it seems as if health care costs could grow more slowly than expected, the trustees say.

But the real gap likely will be bigger than projected, because Congress requires the trustees to assume that Medicare will be able to hold down provider reimbursement costs, but Congress has not demonstrated much ability to let laws that could hold down Medicare provider reimbursement costs take effect, the trustees say.

Filed Under: Disability Income Insurance, insurance broker Tagged With: Disability Income Protection, Paycheck Protection.

Is Going to the Dentist Too Costly? 6 Ways to Save!

July 22, 2015 by Frank West

Going to the dentist can be expensive, and, for many people, downright scary. But if you’re one of the millions of Americans delaying dental care out of fear of the costs, there are some solutions.

Among Americans with dental insurance, 57% have left a dental problem like toothache or bleeding gums untreated, many because of a lack of price transparency. According to the 2013 Dental Care Affordability and Accessibility study, that number is understandably higher for the uninsured, with nearly 70% avoiding treatment. Regardless of how long it’s been since you’ve seen the dentist, follow these six tips for a cheaper (and therefore more enjoyable) trip to the tooth doctor.

1. Uncovered? Get insurance.
One way to help protect yourself from high out-of-pocket dental costs is buying dental insurance. Rates vary, but some plans on eHealthInsurance.com are available for around $15 to $25 a month for coverage, depending on carrier, location, and policy options.

Many dental insurance policies operate on a basic 100-80-50 plan, meaning that 100% of preventive and diagnostic costs are covered, approximately 80% of basic procedures including fillings and extractions are covered, and 50% of major services like crowns and dentures are paid for. Insurance plans also normally have a coverage cap, which means that you’re covered for only a certain maximum dollar amount each year. A cap of $1,500, for instance, means that any charges incurred after the insurance carrier covers $1,500 in dental costs that year would be your responsibility entirely.

For someone without any major problems, a year without dental insurance complete with two exams, X-rays, and cleanings would cost around $370, according to American Dental Association figures. Though there’s not a dramatic decrease when compared with annual insurance premiums, insurance breaks up those costs throughout the year and is good to have around if something more serious goes wrong, making it a better option for many people.

2. Consider a discount plan.
Dental discount plans are another popular option. With these plans, you pay an enrollment fee of about $80 to $120 each year to get discounts ranging from 10% to 60% on all of your dental visits and procedures. There are no annual limits, and exclusions vary by plan. Unlike conventional dental insurance, cosmetic procedures like whitening are typically included in discount plans.

3. Schedule regular cleanings and exams.
The latest research shows annual cleanings for the average dental patient may be just as effective as the twice-yearly cleanings that have been recommended for decades. Several studies have indicated that visiting the dentist twice a year has no notable benefits when compared with a single visit annually. But this single visit is important, as it helps to identify problems before they get serious and expensive. High-risk patients, like those with periodontal disease, may need more frequent visits.

4. Ask for a cash discount and negotiate.
For many dentists, accepting cash payments directly from patients is preferable to filing insurance claims. Some are willing to discount services for cash customers. Many automatically discount cash visits by around 5%, but depending on the clinic, you could get them down further.

Dr. Lawrence Wallace of Larell Surgical Consultants suggests asking the dentist to give you the same rates they give insurance companies, which typically negotiate a 10%-15% discount on the dentist’s charges. Above all, recognize that you are the customer and the dentist ultimately wants your business.

5. Use an HSA to pay with pre-tax dollars.
Health savings accounts allow consumers to set aside money into an untaxable account specifically for medical and dental costs. HSA accounts are used in conjunction with high-deductible health plans, with the HSA funds going toward copayments, uncovered procedures, and other out-of-pocket costs. Making an HSA work for you means estimating how much money you’ll spend on dental costs and putting that amount away into your HSA. This can take some work. HSAs have been commended for teaching financial vigilance by encouraging thriftier medical spending, so using an HSA may decrease your overall health costs by teaching you to be a savvier health consumer.

6. Consider a dental school for treatment.
Dental students need practice, and those nearing their graduation date perform cleanings and other procedures for the public under the supervision of instructors. The American Dental Association offers a listing of all accredited dental schools across the country, many of which offer dental services at steeply discounted rates.

As with all major purchases and health-care expenses, doing your research can often save you the most money. Compare local clinics, based not only on how much they charge but also on what insurance and discount plans they honor. Finally, don’t avoid the dentist because you fear the costs; waiting on dental problems will only make them worse and ultimately more expensive.

Filed Under: Dental Insurance Tagged With: Dental insurance plans

Are Health Insurance Premiums Tax-Deductible?

July 22, 2015 by Frank West

You know you can deduct some medical expenses from your federal income taxes, but don’t know the specifics. Here’s a look at what is and isn’t allowed.

Getting sick can be a real pain in the neck, but at least Uncle Sam gives Americans a little bit of relief in the form of federal income-tax deductions for medical expenses.

“Medical bills can be a huge expense, so the Internal Revenue Service gives people a break so they can recoup some of that money,” says Lisa Greene-Lewis, a certified public accountant with TurboTax.

Some 10.2 million U.S. households collectively deducted $85.3 billion of medical expenses on their 2012 federal tax returns, according to the latest available Internal Revenue Service statistics. Many Americans can make similar write-offs from their state income taxes as well.

But who can deduct what is pretty complicated, and experts say few taxpayers really understand the rules.

“I think the biggest misconception is that people think that all medical expenses are deductible from dollar one. But for my clients, I’d say that well under 10 percent actually qualify to deduct anything,” says Rob Seltzer, a Los Angeles certified public accountant and chairman of the California Society of CPAs’ Financial Literary Committee.

Here’s a look at the basics of deducting medical expenses from your federal income taxes. Consult your tax advisor for specifics regarding your personal situation.

Who qualifies for medical-expense deductions?
The Internal Revenue Code includes two big rules that can severely limit who truly qualifies for relief from medical expenses:

You must generally itemize deductions on Form 1040 Schedule A rather than take the “standard deduction” if you want a break on medical expenses. If what you plan to deduct for everything (from medical bills to mortgage interest) adds up to less than the standard deduction ($6,400 for singles and $12,600 for married joint filers in 2015), there’s no point in itemizing.
Most taxpayers can only deduct allowable medical expenses that exceed 10 percent of “adjusted gross income” (AGI). That’s the amount you earn in a given year from wages, investments and other sources minus what you paid for alimony, student-loan interest and a few other things. So, if a married couple has $100,000 AGI and $10,500 of qualified medical expenses, they can deduct only $500 — $10,500 minus $10,000 (10 percent of their $100,000 AGI). Note: In 2015 and 2016, seniors age 65 or older can deduct any medical expenses above 7.5 percent of AGI.

Seltzer says the only taxpayers who pass both tests are typically those with unusually high medical expenses relative to income. That’s often just the elderly, the unemployed, low-income people or those with big medical bills due to serious illness, in-vitro fertilization or a child’s birth.

Are health insurance premiums deductible?
Yes, in certain circumstances, you can deduct your health insurance premiums as part of your overall medical expenses.

But you can deduct only premiums that you pay with after-tax money from your own pocket. For example:

If your health insurance premiums are paid entirely by your employer or the government, you cannot deduct the cost.
If you have health insurance through your employer and your share of the premium is deducted from your paycheck pre-tax, you cannot deduct the cost because the premiums were tax-free already. If you don’t know whether you pay pre-tax or after-tax, ask your human resources department.
If you buy health insurance through the state- or federally run health insurance marketplaces, you can deduct only the portion of the premium you pay out of your own pocket. You cannot deduct the amount of any subsidy.
If you buy an individual or family health insurance plan, either on the open market or through a marketplace, and you pay all of the cost out of pocket, then the whole amount is deductible.

Your total medical expenses, including premiums, must surpass 10 percent of your adjusted gross income to be deductible.

What else is deductible?
Assuming you pass the above tests, the IRS lets you write off pretty much every out-of-pocket medical expense that’s ordered by a doctor or other health care professional. (See IRS Publication 502 for a list.)

Common items you can deduct from taxes include medical appointments, tests, prescription drugs and durable items like wheelchairs and prescription glasses. In fact, you can even write off unusual expenses as long as they’re medically necessary. For instance, one of Seltzer’s clients deducted a home lap pool because a serious injury meant the man could only swim for exercise but couldn’t risk colliding with others in a public pool.

You can also deduct transportation expenses for going to the doctor — parking, tolls, mileage, cab or bus fares — and even air fare and certain lodging costs for out-of-town treatments.

But remember, you can only write off out-of-pocket expenses — copays, deductibles, etc. — not bills that your insurance covers.

What’s not deductible?
There’s a wide list of things you can’t deduct, from medical marijuana to over-the-counter vitamins and drugs (except insulin). Hair transplants and cosmetic surgery are also out, unless procedures correct underlying medical problems (like breast-reconstruction surgery following mastectomies).

As noted above, you also can’t deduct expenses that your insurance covers, nor things you paid for with money from a flexible spending account or health savings account. If you get insurance through work, you typically can’t write off your share of the premiums because your employer won’t normally withhold taxes on the money in the first place.

Writing off health insurance for the self-employed
One big exception to the above rules involves health insurance premiums paid by self-employed people. You can write those off as adjustments to income even if you don’t itemize your deductions. The adjustment to income cannot exceed what you earned, though.

Self-employed people can deduct health insurance premiums directly on Form 1040 (Line 29 on returns for the 2014 tax year). You deduct all other qualified medical expenses on Schedule A, Line 1.

How to maximize your health care deductions
You obviously can’t control when you get sick, but TurboTax’s Greene-Lewis says Americans who are close to meeting the annual AGI threshold should “bunch up” procedures to maximize any deductibility.

For instance, if one family member has a major illness in a given year and rings up big hospital bills, everyone else in the family should get any needed dental work, prescription eyeglasses, etc., during the same year in order to boost the available tax break.

“You should look at anything you were putting off and bump it up [to the current tax year] if that’s going to put you over the AGI threshold,” she says.

You don’t need to attach receipts to your 1040, but it’s a good idea to keep them for three years after filing your return just in case the IRS audits you.

This article original appeared on Insurance.com

Filed Under: Health Insurance, Health Savings Account Tagged With: insurance broker, IRS Tax Penalty

1 Easy Way to Save Money on Health Care Expenses.

July 21, 2015 by Frank West

The average American spent $400 more on health care and health insurance in 2012 when compared to 2010, a gain of 12.5%. This compares to just a 7% gain in total average spending, meaning that more and more health care costs are taking a bigger bite out of consumers’ income.

One thing individuals can do to help save money on health care costs is utilize a Health Savings Account, or HSA. These savings accounts allow individuals with high-deductible health insurance to save money for medical expenses without paying taxes.

What an HSA is
People with health insurance deductibles greater than $1,250 for an individual and $2,500 for families can qualify for an HSA. An individual is then allowed to contribute $3,300 to an HSA tax-free in 2014, and the limit stands at $6,550 for an individual with a family.

In turn, that money is withdrawn before taxes every month into a special savings account and can be used on qualified medical expenses, which the IRS defines as those used for the “diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.”

Those of course include hospital visits, prescription medicines, and other services, but also thing like eyeglasses, insulin, and hearing aids. The complete list is available from the IRS.

Yet not only is the money contributed tax-free, but it also grows tax free and is withdrawn tax free, known as “triple tax savings.” This means if you don’t use the $2,000 amount saved and it grows to $2,500 after years of interest payments, that $500 doesn’t face the capital gains tax like other investments, and you’ll never pay a single cent in taxes when it is withdrawn.

All told, an HSA can be an incredibly effective tool to help save on health care expenses that all people face in their lifetimes.

How an HSA works
Those with high-deductible plans can get an HSA through their current insurer if they offer it, or through a bank like Bank of America (NYSE: BAC ) or Wells Fargo (NYSE: WFC ) . The person will then decide how much they want to save each month, and then that money is withdrawn and put into the account.

Like any other bank account, there is an associated debit card that is issued to pay for those eligible health care expenses. Also, the money can be invested into mutual funds provided the balance of the HSA exceeds $1,000, and also investments that pay less interest, but have much lower risk. It should be noted that individuals should ensure they have enough to cover potential unplanned expenses before they invest heavily in funds that may be volatile and stand the chance to lose money.

Individuals should also always review all account disclosures for fee information, interest rates, FDIC coverage, and other information to ensure their HSA is with a trustworthy provider and indeed is what’s best for them.

Why you should get an HSA
The principal benefit of the HSA is the tax savings it provides. Consider the example Bank of America provides on its website of a family of four that saves $4,000 over 20 years, spends $2,000 each year, and the account grows at just 2.5%. That family would have saved $23,091 in taxes, and have more than $51,000 in the account at the end of year 20.

Outside of the tax benefits of an HSA, a great benefit too is that unlike Flexible Spending Accounts (FSA) that are owned by your employer, the money in an HSA is yours, it never expires, and can be saved for years and years.

There is no denying the cost of health care is on a troubling path, but using an HSA can help consumers ease the burden through significant tax savings and other crucial benefits.

Filed Under: Health Savings Account, HSA Tagged With: HSA

3 Medicare Enrollment Myths.

July 18, 2015 by Frank West

Medicare can be deeply confusing, and there are a lot of myths out there about how it works and what works best for a particular situation. Here are three myths that you need to watch out for to ensure that you don’t lose out on important coverage or get hit with big penalties.

Myth #1: I’m automatically enrolled
Unless you’re already getting Social Security or Railroad Retirement Board benefits when you turn 65, you will not be automatically enrolled in Medicare. You need to apply directly with Social Security to get on the books.

You can enroll anytime from three months before your 65th birthday month to three months after, meaning that you have a seven month period in which to choose the right plan for you. Part A is free, so it makes sense to sign up right away.

Of course, if you’re still working you might think that you don’t need Medicare Part B (which isn’t free), so there’s no point in enrolling. That brings us to myth number two:

Myth #2: I can wait to enroll
One thing you don’t want to do when it comes to Medicare is wait. Part A is free, so, again, no matter what your situation it makes sense to enroll right away.

When it comes to Part B, it generally makes sense to enroll as soon as you’re eligible, as making a mistake can be quite costly. Missing your enrollment can mean a permanent 10% annual increase in your Part B premium and a 1% monthly increase in your Part D premiums, which is probably not something you want to deal with.

What if you or your spouse are still working and have health insurance? In this case, check with your current provider to see how they work with Medicare. It might make sense to postpone — but don’t forget about signing up when you do retire. You’ll have eight months to do so.

Also, as a rule of thumb, if you work for a company with fewer than 20 people, it makes sense to sign up when you’re first eligible. That’s because smaller plans are allowed to drop you once you’re eligible for Medicare, and they might even refuse to pay Medicare-eligible claims.

If you’re retired and have health coverage, sign up anyway. This applies even if you have COBRA, a retiree health insurance plan, or veteran’s benefits. All of these plans become secondary plans once you’re signed up — and none of them exempt you from the late-enrollment penalties.

Myth #3: Once I’ve signed up, I’m done
While Parts A and B cover a fair amount, neither has out-of-pocket limits. That means that the 20% of costs you’re responsible for under A and B could add up to a lot of money should you need extensive treatment. This is the main argument for getting Medigap’s supplemental coverage or signing up for an Advantage plan.

But even here, it’s important to keep an eye out for gaps in coverage.

The Part D donut-hole is a great example. Part D provides for prescription drug coverage, but once you and the insurance company have collectively paid a certain amount on prescription drugs ($2,960 in 2015), you become responsible for significantly more of the cost — 45% of brand name drugs and 65% of generics. Once your out-of-pocket spending reaches $4,700, the donut-hole closes and you’ll pay a small amount on drugs for the rest of the year.

In other words, take the time to do your homework. Don’t just stop at Parts A and B, and remember to note the deductibles, premiums, and coverage limits in the plans you’re reviewing. Taking the time now can save you a lot of stress down the line.

Filed Under: Medicare, Medicare Supplement Plans, Medigap Insurance Tagged With: Medicare Insurance Plan, Medicare Supplement

List of 5 Common Medicare Mistakes

Quick Links