Avoid This Mistake: Over-reliance on the HR Department

Retirees and Active Employees Make This Mistake OFTEN

Maximize Your Medicare has many examples of This Happens, where an employer inaccurately, or wrongly, informs both active employees and/or retirees. You may think that your HR department (or the person responsible for benefits) would be fully informed. That is “almost” funny.

The Types of Mistakes Are Too Numerous to Count

  • HR is not aware of the market premiums of Medigap or Medicare Advantage
  • Employer-sponsored Medicare plans are intentionally designed to look seamless, but the cost-sharing details (deductibles, copays), can be inferior to the private market
  • HR is not aware that certain Medigap plans will be discontinued in the future
  • HR is not aware that employee benefits are declining at employers of all sizes
  • HR is responsible for many aspects of benefits, only one of which is Medicare
  • You may not be able to get the most efficient solution if you wait until after 65.5 yrs old
  • The only person that faces the implications of incomplete/inaccurate information: you

Does This Mean That Retiree / Employer Benefits Are Always Worse?

No, obviously not. It can be the case that the employer-sponsored benefits are best. Here are some things that can be superior under group plans.

  • Canceling group plans may be permanent (you may not be able to go back)
  • The Part D coverage gap may not exist (this is rapidly going away, i.e. many group plans are incorporating the donut hole)
  • Access to affordable dental/vision/other may be restricted if you cancel your employer-sponsored plan
That is entirely different from blindly accepting the information from your HR point person as gospel. 

The point of this post cannot be overstated. Rule #1A of financial planning: do not ever ever ever give away free options. In this case, the free option is your ability to get the information regarding your choice. Over-relying on your employer’s HR department is a clear violation of this rule. Clear.

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