Medicare, in any given “normal” year, is confusing.
2020 has brought about so much, and we are only nearing the half-way mark. At our firm we never could we have imagined that we would be seeing so many people struggling with rather unexpected Medicare decisions due to a virus called Covid-19.
In a normal year, people turn 65 on a daily basis. Generally, they retire in a systematic and pre-planned way, and everyone is more or less prepared.
But this year? Yes, we see the typical turning-65 crowd with their retirement plans upcoming, but we are also seeing a new wave of people displaced due to job layoffs, furloughs, and more.
And, beyond that, there are so many people affected by Covid-19 who are just tired, frustrated, fearful, and ready to “hang it up.” Thus, they retire. And most will need some assistance with Medicare.
When most people in the US retire, they need to transition into the Medicare health insurance system in some way, shape, or form. It is often a very stressful time.
So many people have had their health insurance coverage through their workplace for years. They often made an annual election of coverage from their employer for the new calendar year, but it was a rather simple decision, such as, “Would you like door #1 or door #2 for your coverage next year?”
Choice made; all enrolled. Typically, not much changed, and if they didn’t care for the coverage in any given year, the next enrollment period would roll around where they could fix things.
Enter the Medicare system. From the time a person enters the ring, there is a barrage of fliers, solicitation phone calls, confusion, input from friends, family, and others that tell you exactly what you have to do.
What does this create? Stress, confusion, frustration, irritation. All factors that can result in mistakes.
Let’s talk about some ways to keep your sanity in regular – and Covid infused – Medicare times.
If you were planning to retire in the summer of 2020, just keep on pace. However, many people that are retiring now are over age 65, and they have been enrolled into Medicare’s Part A coverage (which is hospital coverage) for several years.
Typically, when these pre-retirees come to us for help enrolling into Medicare’s Part B (the medical coverage that they now need), we would send them to their local Social Security Administration office with their proper forms in hand to then enroll into Part B.
Well, Covid-19 closed the offices! So, we’ve adapted to the online methodology to enroll into Part B. It’s worked rather well, but you have to know how to accomplish things a bit differently these days. A good agent can help you cut through the clutter and be more efficient.
We certainly aren’t taking on the role of your financial advisor or counselor. However, we are often finding that many people who were able (but didn’t want) to retire pre-Covid now “have to” retire in the present situation – and they are actually enjoying it. It wasn’t planned, but they are adapting to the concept.
Some are using the unplanned retirement situation as a means to get to another career, spend time virtually with grandkids, make travel plans for down the road, etc.
Some new retirees did not plan at all to be retirees, and they don’t want to be in this current situation.
The danger in these cases is that the person is over 65 years old, is suddenly unemployed, and now needs health insurance for this temporary condition.
This is where a lot of people make the mistake of enrolling into Cobra insurance coverage without discussing with a professional how Medicare interacts with Cobra.
So what is Cobra? Cobra is health insurance coverage that is provided by your employer for an extended period after you stop working for them. It will typically last for 18 months.
Very often, a person in this situation, who wants to find a new job, will decide to enroll into the Cobra insurance coverage without understanding the implications that this brings when they are over age 65.
For a person past that age, who is enrolled into Cobra coverage, Medicare technically becomes the primary payer for medical claims. Unfortunately, the person doesn’t know that and does NOT enroll into Medicare which technically means they have no primary insurance coverage.
The greatest problem with Cobra is that it looks, feels, and acts just like the “old employer’s coverage” so the person retains it until they find another job with benefits.
We caution people in this situation to not plan to go back and forth between Medicare health insurance coverage and employer health insurance. Medicare was not designed to be “temporary” coverage. Not that it can’t be used as such, but you can experience major headaches trying to do it.
If you are suddenly faced with an induced retirement that you didn’t plan, you may turn to make rather harried and fast decisions about health insurance coverage that you may come to regret.
Though difficult, it’s much more rewarding to find a way to slow down and take a few dedicated hours to learn about your new health insurance options.
If you grab the easiest and cheapest product out there, you may suffer some of the longer-term Medicare mistakes that many people make. Taking the time to understand the two product paths that you may take beyond Original Medicare can be a life saver down the road.
Find a good agent that can explain to you how the entire system works, and try not to give a knee-jerk reaction to get the insurance decisions “off your plate” during a stressful time.
Medicare has many timelines. Because Covid-19 happens to be impacting so many people during the summer months, the timing can be on your side.
For instance, let’s say you are setting up your Medicare coverage plus a supplementing product for August 1, 2020. You didn’t plan to retire, so you rush to make a decision and be done with it.
“Phew, I put that to rest,” you say to yourself.
But, you do some belated investigating in September and have buyer’s remorse by October.
Well, since the Annual Election Period is October 15 – December 7 of each year, you have the opportunity to change your plan and also preserve your Open Enrollment period (the period that protects those with pre-existing conditions) related to Medigap products.
Note: This year would be the only year where a mistake can be undone, so keep that in mind.
Covid-19 has caused anguish to many people and industries. Insurance was not spared. But, rest assured, we will all adapt and find new ways to accomplish the same results. We are here to guide you through that important transition to the Medicare world.
And you’ll be OK.
How has Covid-19 affected your retirement plans? Did you have to make a Medicare decision because of the present Covid situation? Did you rush with your decision or did you do some research before committing? Please share your experience with our community!