Nuances of Medicare – 5 things to keep in mind

Published on September 18, 2024 | LPL Financial

Medicare is complex with many different moving parts involved. First and foremost, it is always beneficial to gain a solid understanding of your options. There are two main types of Medicare:

• Original Medicare
• Medicare Advantage (also called Part C)—Medicare Advantage is a Medicare-approved plan from a private company offering a replacement option for Original Medicare for your health and drug coverage.
• There are also other types of Medicare health plans for interested parties.

Confucious once said, “To know what you know and what you do not know, that is true knowledge.” These are wise words to take to heart, especially when applied to navigating Medicare without being surprised by unexpected pitfalls.

Here are five tips to help you plan and prepare so you do not get caught off guard by the nuances of Medicare.

1. Be aware of avoidable late fees or delays

Have you ever noticed that one or two couples always arrive late at a dinner party? Some people have a tendency of being late. The same is true when it comes to signing up for Medicare. Generally, if you are age 65 or older and receive Social Security benefits, you will automatically be enrolled in Part A. The nuance here, however, is if you don’t sign up for Part A (if you have to buy Part A, and you don’t when you are first eligible for Medicare) and Part B within your eligibility window, your enrollment could get delayed, and you could be subject to a late enrollment penalty.

2. Know what is covered and what is not

Not everything is covered by Medicare. Services that aren’t covered by Part A or Part B will have to be paid for by yourself unless:

• You have a Medicare Advantage or Medicare Cost Plan covering the services.
• You have other coverage, such as, Medicaid.

It is critical to understand that Original Medicare doesn’t cover everything. Several of these services that are not covered include:

• Cosmetic surgery.
• Hearing aids and exams to fit them.
• Long-term care.
• Routine physical exams.
• Massage therapy.
• Eye exams (for prescription glasses).
• Covered items or services you get from an opt-out doctor or other provider (unless it is an emergency).
• Most dental care, such as routine cleanings, tooth extractions, fillings, and dentures. Although, in some cases, Original Medicare may cover some dental services related to specific medical procedures, such as organ transplants, cancer-related treatments, or heart valve repair or replacement.

3. Avoiding HSA and other tax penalties

A health savings account (HSA) is a beneficial tool to have in your financial strategy belt. However, it is helpful to know that you are not eligible to make contributions to an HSA after you have Medicare. Being aware of this can help mitigate the risk of being subject to the “tax penalty.” It would help if you made your last HSA contribution the month before your Part A coverage begins. Pay attention to potential tax penalties for any other aspects of Medicare as well and, reach out to a qualified tax advisor to discuss your specific situation.

4. Do research on ACOs

An ACO (Accountable Care Organization) consists of a group of hospitals, doctors, and other health care providers that have teamed up voluntarily to coordinate your health care. It is a part of Original Medicare and not a separate plan. ACOs are designed to hold providers accountable for the healthcare of their patients, guiding them through the complex healthcare landscape and working to help them save money by recognizing unnecessary tests and procedures. ACOs are not for everybody and its advisable to discuss the financial implications with your financial professional.

Several advantages and disadvantages of an ACO may include:

Advantages:

• Potentially more efficient coordination of care.
• Improved preventive care.
• Potential cost savings benefits.

Disadvantages

• The possibility of implementation challenges.
• Enlisting the help of providers that aren’t a good fit.
• The potential for misdirected incentives amongst the providers.
• Unexpected expensive or low-quality post-acute care.

5. There is no shame in asking for help

Part of helping yourself move forward in the pursuit of your goals is seeking the help of a mentor or someone who has more knowledge than you. When it comes to your finances and how programs like Medicare could impact them, consider consulting a financial professional to determine how your decisions might affect your present and future goals and strategies.

Important Disclosures:

Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.

The Medicare website can be a valuable resource.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

Sources:

Medicare and You Handbook 2024

The Pros and Cons of Accountable Care Organizations | Med USA (medusarcm.com)

Top 5 Risks in Accountable Care Organization Models – CPA & Advisory Professional Insights (kaufmanrossin.com)

This article was prepared by LPL Marketing Solutions

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