Ramsey Solutions Has Urgent Advice for Anyone Enrolling in Medicare

Dave Ramsey is an undeniably popular personal finance expert. He is best known for his approach to getting out of debt and getting ahead financially, but his company, Ramsey Solutions, also offers advice on many other money topics, including Medicare coverage.

Their recommendations can be valuable if you are approaching Medicare age or simply want to prepare for future healthcare costs.

Here, explore everything Ramsey Solutions get right about Medicare.

The importance of enrolling on time

You may know you qualify for Medicare at age 65. But it's critical to understand the Medicare enrollment timeline. Otherwise, you could get stuck paying a late penalty.

"If you get it wrong, you could end up paying penalties the rest of your life," said a recent post by Ramsey Solutions.

Your Initial Enrollment Period lasts seven months: It starts three months before the month you turn 65, includes the month you turn 65, and ends three months after. If you miss that window, you may have to wait for the General Enrollment Period, which runs from Jan. 1 through March 31 each year. You may also have to pay a late enrollment penalty, unless you qualify for a Special Enrollment Period.

A Special Enrollment Period isn't automatic. You may qualify in certain circumstances, such as having health coverage through your or your spouse's current job, losing Medicaid coverage, being affected by a declared disaster or emergency, or receiving inaccurate or misleading information from a health plan or employer.

The takeaway? Don't assume you'll automatically get extra time to enroll. Knowing which enrollment period applies to your situation can help you avoid unnecessary costs and coverage gaps.

Opting for more coverage

When you start exploring your Medicare options, you'll quickly realize there are many different plans and combinations. Ramsey Solutions says most people do best with Original Medicare plus a Medigap supplement. If you opt for a bare-bones plan, you'll likely find coverage gaps and more out-of-pocket expenses.

"Medicare Advantage can genuinely be the right fit for some people though — especially if you're healthy and your doctors are in the plan's network," said a post by Ramsey Solutions. "But watch out for insurance agents and Medicare advisors who push Medicare Advantage no matter what. They make more money from selling you Medicare Advantage — and it's easier because it comes in one package, so they don't have to chase down a supplement policy that fits your needs."

The need for supplemental insurance

Although Medicare provides baseline health insurance coverage, Ramsey Solutions suggests that Medicare alone may not be enough coverage. Many people will need to purchase a supplemental plan, called a Medigap plan, to help fill in the gaps.

Even Medigap policies might not be enough.

"Because Medicare doesn't cover everything, some people need to get additional health insurance beyond Medigap," according to Ramsey Solutions.

Understanding the enrollment periods

After you get your coverage locked in during your initial enrollment period, getting familiar with the subsequent enrollment periods is essential. These periods can give you opportunities to change your Medicare health or drug coverage.

The Medicare Open Enrollment Period runs from Oct. 15 through Dec. 7 each year. During this window, you can switch Medicare Advantage or Medicare drug plans, move between Original Medicare and Medicare Advantage, or make other coverage changes. Changes generally take effect Jan. 1 of the following year.

The Medicare Advantage Open Enrollment Period runs from Jan. 1 through March 31 each year. It's available if you're already enrolled in a Medicare Advantage plan and allows you to switch to another Medicare Advantage plan or return to Original Medicare.

The Medigap Open Enrollment Period works differently. It's generally a one-time, six-month period that starts when you're 65 or older and enrolled in Medicare Part B. This can be an important window for buying a Medigap policy because you generally have broader options during this period, even if you have health problems.

Keep these dates and windows in mind throughout retirement. Missing an enrollment opportunity could affect your coverage options and, in some cases, your costs.

Avoiding the "bikini" approach to Medicare

While assuming that everything is covered through Medicare is tempting, that's not true.

"Let's just say if Medicare were an outfit, it'd be a bikini. A lot of things Medicare doesn't cover are also things regular health insurance doesn't cover. But Medicare has a few extra gaps too," wrote Ramsey Solutions in a recent post.

Medicare does have important coverage carve-outs, so don't assume a service is completely off the table just because it's commonly described as "not covered." For example, Medicare Part B covers a yearly "Wellness" visit, although it's not the same thing as a routine physical exam.

Medicare also covers certain chiropractic services, including spinal manipulation to correct a subluxation, and medically necessary podiatry services for certain foot injuries or diseases. Routine foot care, such as nail trimming and treatment of corns and calluses, generally isn't covered.

The bigger lesson is to understand exactly what Medicare covers before you skip care or assume you'll have to pay the entire bill yourself. Check Medicare.gov or ask your healthcare provider about coverage for your specific service before deciding.

Don't forget about long-term care insurance

Medicare can help you with medical costs. However, if you need the specialized care of a nursing home stay, assisted living facility, or in-home caretaker, Medicare usually won't pick up the entire tab for a comfortable situation.

"Once you get a solid long-term care insurance policy in place, you'll have a lot more peace of mind when you think about growing old," wrote Ramsey Solutions in a recent post.

Ramsey Solutions suggests buying long-term care insurance around 60, when you're likely still healthy enough to qualify but haven't spent years paying for coverage you probably won't need yet.

Bottom line

The right approach to Medicare can help you avoid wasting money on medical costs in retirement. Although many retirees bank on this type of coverage, it's critical to understand what's not covered. You'll likely need to fill in the gaps to prevent a financial disaster due to medical care costs in retirement.

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