“Medicare planning is a complicated and confusing process. Be sure you understand all of this benefit’s nuances and can separate fact from fiction.” Brad Rhodes
Medicare is an essential element of any successful retirement. Yet, it is often poorly understood. In my capacity as a Medicare planner, I am continually astounded by how many false beliefs people have about the system and its many rules, requirements, and deadlines.
Here are five of the most common wrong assumptions I have come across related to Medicare and the Medicare planning process. Believing any one of these can negatively affect you as you plan to retire.
Myth 1: Medicare is only available to people 65 years and older.
Age 65 is the most common age to enroll in Medicare. But did you know that certain younger people may also qualify? For example, those who have been getting Social Security disability benefits for 24 months can apply for Medicare. Also, people with certain terminal diseases such as amyotrophic lateral sclerosis (Lou Gehrig’s Disease) or end-stage kidney failure may be able to get Medicare.
Myth #2: I won’t qualify for Medicare because I am in bad health.
Fortunately, getting Medicare coverage is tied to Social Security benefits, not to a person’s health. Medicare can neither deny coverage nor raise rates due to pre-existing conditions or poor health. The same applies to Medicare Advantage plans too.
However, Medicare supplement plans are another somewhat complicated story. You may purchase a supplement plan regardless of your health status, but only if you enroll during the Medicare supplement open enrollment period. If you don’t sign up at that time and want to buy a supplement later, insurance companies can reject your application based on health. If they do accept you, they can also charge you more.
Myth #3 I will automatically get Medicare coverage is when I turn 65.
This belief is something of a half-truth. Enrollment in Medicare Parts A and B will occur automatically if you’re already getting Social Security or a Railroad Retirement Board (RRB) pension.
If this is your situation, you don’t need to do anything to start receiving Medicare. Three months before turning 65, you should receive a “Welcome to Medicare” package giving you instructions and plan details. If you are not getting these benefits at least four months before you turn 65, you must actively enroll at that time. Medicare supplement or advantage plan enrollment is voluntary, as is Part D- prescription drug coverage.
Myth # 4 I won’t get Medicare because I never worked or worked for only a short time.
This belief is an incorrect but understandable assumption many people make. The reality is that you qualify for Medicare if you are 65 years or older and are a U.S. citizen or legal resident, regardless of how long you’ve worked.
Your work record does determine your cost for Part A, though. If you expect to receive Part A premium-free, you must have paid Medicare payroll taxes for at least ten years or 40 quarters. Anything thing under 40 quarters means you’ll pay a discounted premium.
If you paid Medicare payroll tax for less than 30 quarters, you pay the entire premium. Non-working spouses can qualify for Part A premiums under their spouse’s work record when they turn 65, provided the working spouse is at least 62 years old.
Myth #5 I can enroll in Medicare at any time.
Some people believe that the open enrollment period is the time to sign up for Medicare. In fact, the seven-month Initial Enrollment Period (IEP) is the right time to enroll. Your IEP is your birthday month and the three months before and after it. You should enroll in Part A at this time. If you’re still working, though, you might not need to sign up for Part B immediately.
If you forget to enroll in Part B during the Initial Enrollment Period, you’ll end up paying a lifetime penalty when you do sign up. The longer you wait to sign up for Part B, the greater the penalty. This scenario also applies to Part D.
Summing it up: There are probably dozens of other myths surrounding Medicare, misconceptions that could cause you to make costly, frustrating mistakes when you plan. Avoiding adverse outcomes depends on careful strategic Medicare planning utilizing a Medicare expert’s services.
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