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.