Before reading this article, if you need a Medicare primer, click here. One of the least appreciated ways to sustain wealth is by avoiding costly financial mistakes. This is especially true in retirement. Medicare is the cornerstone to financial health in retirement. However, far too many individuals make expensive Medicare mistakes when enrolling in and managing this keystone benefit.

Four Big Mistakes to Avoid

Here are the top Medicare mistakes you can help your clients avoid:

1. Delaying Enrollment—Unless a client is already receiving early Social Security benefits, clients need to sign-up during a designated window, extending from three months before their 65^th birth month to three months after their 65^th birth month.

Many individuals delay Medicare enrollment because they are covered by their employer’s plan, a retiree benefit plan or under COBRA. This is a mistake on three counts.

1. Since many private plans put Medicare as the primary coverage for individuals age 65 and above, the failure to enroll in Medicare may mean gaps in coverage and higher out-of-pocket costs.
2. Those who do not sign up during this window also lose out on the opportunity to buy Medigap insurance, regardless of pre-existing conditions. After this time, insurers are free to reject coverage or exclude certain pre-existing conditions.
3. Most critically is the failure to enroll during the age 65 window, which results in a lifetime late-enrollment penalty of 10 percent on Part B coverage for each 12-month period someone could have been covered, but were not, and 1 percent of the base premium on Part D for each month without Part D coverage.
4. Not Doing the Research—The federal government provides individuals with two plan choices: the traditional Medicare option and the Medicare Advantage Plan. Each plan differs with respect to cost, coverage and doctor access—all aspects which individuals should consider before enrollment.
5. Not Contesting Part B and D Premiums—Medicare premiums are tied to income, which the Social Security Administration calculates based on the last tax return filing of the enrollee. This means they may be accessing a client’s 2018 tax return for purposes of calculating 2020 Medicare premiums. Because a client’s current income may be substantially less due to retirement, individuals can ask the SSA to reconsider their calculation due to a change in circumstances; usually a signed statement from the client’s employer will suffice.
6. Putting Part D and Medicare Advantage on Autopilot—Coverage, premiums and requirements change every year. Your clients should compare their options annually to determine the most appropriate and cost-effective plan. Moreover, spouses may have different health care needs and medication requirements, so plans should be evaluated separately.

Advisors can play a valuable role in helping their clients make the most of their Medicare benefit, so be sure to schedule time with clients turning age 65 to discuss this key planning decision.

See referenced disclosure (2) (3) and (4) at https://blog-dev.americanportfolios.com/disclosures/