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10 Costly Medicare Mistakes to Avoid

Summary: Medicare is complicated, and if you aren’t careful, there can be pitfalls. There are 10 costly Medicare mistakes all too common to new and old beneficiaries. Explore the 10 costly Medicare mistakes you can’t afford to make and learn how to avoid them altogether. Estimated Read Time: 17 mins

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Table of Contents:

  1. Delaying Medicare Without Creditable Coverage
  2. Enrolling in the Same Medicare Coverage as Your Spouse
  3. Not Comparing Medicare Advantage to Medicare Supplement Plans
  4. Keeping the Same Medicare Advantage Plan Every Year
  5. Enrolling in the Wrong Medigap Plan
  6. Missing Your Special Enrollment Period When Losing Creditable Coverage
  7. Going to an Out-Of-Network Doctor With a Medicare Advantage Plan
  8. Not Enrolling in Medicare Part D (Even if You Don’t Take Prescription Drugs)
  9. Keeping the Same Medicare Part D Plan Every Year
  10. Earning Excessive Income After Retirement
  11. How To Avoid the 10 Costly Medicare Mistakes

Medicare has a lot of considerations, only complicated further by the fact that everyone has different healthcare needs. So, it’s understandable that there are bound to be some mistakes if you aren’t careful. There are 10 costly Medicare mistakes you should avoid so that you don’t end up overpaying for coverage.

Common Medicare mistakes won’t only affect your finances but can also hinder your coverage. Furthermore, costly Medicare mistakes can begin at your time of enrollment and may follow you for the rest of your life.

Even though enrollment in Medicare Part A is automatic for those who qualify, you’ll need to sign up for Part B. In addition to Part B, Medicare Supplement plans, Medicare Advantage plans, and Medicare Part D Prescription Drug Plans also require you to sign up in order to receive coverage. If you do not enroll in these coverage types when you first become eligible, you may experience a lapse in coverage or become unable to enroll in the future, as each plan type has its own enrollment requirements.

How you sign up and when you enroll is important. Otherwise, you could be setting yourself up for penalties and fewer coverage options. There are also several road bumps you may encounter after enrollment. Below, we’re breaking down the 10 costly Medicare mistakes you can’t afford to make.

1. Delaying Medicare Without Creditable Coverage

Topping our list of the 10 costly Medicare mistakes is failing to enroll in Original Medicare without having creditable coverage. This is because by doing so, you’re subjecting yourself to penalties, some of which will stay with you forever. Here are the penalties you risk when you are delaying Medicare:

  • Although most avoid delaying Medicare Part A, those who do will incur a 10% premium increase for double the number of years you forgo coverage.
  • Your Medicare Part B penalty is going to cost you 10% more than your premium and is based on each 12-month period that you forgo coverage despite being eligible. This penalty never goes away.
  • The Medicare Part D penalty is also applicable to those who qualify for Part D but do not enroll and do not have creditable coverage through an employer or union. This penalty is 1% of the average annual premium for each month you delay coverage. This penalty never goes away.

If you or your spouse has creditable coverage through employment, meaning healthcare coverage from an employer with 20 or more employees covering everything Original Medicare covers, then you can delay without penalty. Otherwise, this Medicare mistake can come back to haunt you.

2. Enrolling in the Same Medicare Coverage as Your Spouse

Medicare sign-up mistakes come in many different forms. A common mishap is enrolling in the same coverage as your spouse. While some Medicare Part A benefits can be shared among spouses, other components cannot. Furthermore, you don’t want them to be because everyone’s healthcare needs are different. Just because a plan works for your spouse does not mean it will work for you and your needs.

Not everyone enrolls in a Medicare Supplement plan, yet the coverage may still be needed by your partner. They can enroll in this case to stay covered for their medical needs. However, a Medicare Advantage plan may make the most sense in your situation. Here are some of the situations spouses more commonly find themselves in:

Medicare Coverage Why You Need Your Own
Medicare Advantage Plans
  • Different plans work better for different individuals.
  • Medicare Advantage uses networks, and you’ll need to find a plan that your specific healthcare providers are a part of to maximize coverage.
  • Healthcare needs are only part of the equation. Plans can vary in cost.
  • Access to Medicare Advantage plans may also vary depending on the ZIP Code you live in.
Medicare Supplement (Medigap) Plans
  • Healthcare needs vary. Even though each carrier will provide the same level of coverage per lettered plan, each Medigap plan will offer a varying level of coverage.
  • Again, costs can vary. You’ll need to find the right plan offered at the lowest premium for your needs. This can vary due to a number of factors, including your medical history.
Medicare Part D Prescription Drug Plans
  • Cost and availability are also factors to consider when enrolling in Part D.
  • However, the main concern here is that Part D plans operate based on formularies, which you’ll need to check to ensure your specific medications are covered.

Ultimately, it doesn’t matter which coverage you enroll in, only that you identify your needs and choose what’s right for you. This changes from individual to individual, which means even your spouse will want to find coverage specific to their needs.

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3. Not Comparing Medicare Advantage to Medicare Supplement Plans

Of the 10 costly Medicare mistakes you can make, this might be the most frustrating for consumers. There are several reasons you need to compare Medicare Advantage plans and Medicare Supplement plans. Failing to do so can mean plenty of costly headaches when receiving healthcare services:

You Can Only Choose One

A lot of people may think a certain type of coverage is the “best” when this is a fallacy. The truth is you’ll want to compare your options and choose the coverage option that is right for your needs. However, you can’t have both. Either enroll in Medicare Advantage or a Medigap plan.

It’s also worth mentioning that some enrollees believe that Medicare Supplement can help provide supplemental coverage for Medicare Advantage plans. This, too, is false as it is illegal to enroll in both coverages at the same time.

Since the law prohibits beneficiaries from enrolling in both, it’s important to understand the coverage you need and what is being offered. You can only choose one, meaning you’ll need to compare and conduct due diligence before enrolling.

Beware of Network Restrictions and Coverage Discrepancies

How you are covered and where you can use your coverage will differ between Medicare Advantage and Medicare Supplement plans. To better understand why this is, it’s important to compare the two and see how they affect your healthcare:

Considerations Medicare Advantage Medicare Supplement
How You’re Covered
  • Original Medicare services are covered.
  • Anything else is at the discretion of your insurance carrier and their plan.
  • You’re covered for the leftover expenses that can occur after using Original Medicare coverage. Medigap is supplemental coverage.
  • There are 10 different lettered Medigap plans, plus two high-deductible options, available with varying levels of coverage available.
Where You’re Covered
  • Anywhere that accepts Medicare coverage, however, each plan has its own network you’ll need to use to receive care.
  • Medigap plans have no networks. Simply use your coverage at any healthcare provider that accepts Medicare.

Inadequate Coverage

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Not only is failing to compare the two one of the 10 costly Medicare mistakes you can’t afford to make, but it can lead to frustrations when you need medical care. A lack of coverage may occur for the healthcare services you need, or there may be a billing conflict because you thought you were covered by one or the other when you actually were not.

There are many moving parts in healthcare, and getting it right can help alleviate some of the stress associated with receiving medical attention. Always compare Medicare Advantage and Medicare Supplement plans to be sure you’re enrolling in the right fit for your needs.

4. Keeping the Same Medicare Advantage Plan Every Year

Imagine shopping for a Medicare Advantage plan, finally finding the right one for you, and signing up. A year or two goes by, and you realize that the coverage you need isn’t the same as it once was, or you find that there are Medicare Advantage plans offering you the coverage you need but at a lower monthly premium.

It’s not a great feeling, and it’s one of the biggest Medicare enrollment mistakes anyone can make. Needs, premiums, and networks can all change over time, and each can affect how you’re covered or how much you pay. This is why you’ll want to revisit your coverage each year.

Remember, Medicare Advantage comes from private insurance carriers. Adjustments can come as they maintain risk as a business due to a variety of market factors. The details of your Medicare Advantage plan will change year to year, and you’ll need to stay on top of things to be sure that your coverage still meets your needs.

You may also find that as your coverage needs evolve, a Medicare Supplement plan may be the right option to assist with the changes you’ve faced.

5. Enrolling in the Wrong Medigap Plan

Number five on our list of 10 Medicare mistakes is can be tied back to number three on our list. One of the downsides of not comparing Medicare Advantage to Medigap options is that you run the risk of not fully understanding your options. Here’s what we mean:

  • Every lettered Medigap plan is standardized. So, no matter which carrier you get your coverage, in all but a few states, you’re going to receive the same coverage when you enroll in Medicare Supplement Plan G or any other plan, no matter who provides it.
  • But that doesn’t mean every Medigap plan offers the same level of coverage. Medicare Supplement G is going to have a lot more coverage than Medicare Supplement A. It’s important to understand the differences and which is right for you.
  • Furthermore, while a lot of things might affect your premiums, one main factor will be the amount of coverage you need. This means that if you enroll in a Medigap plan with more coverage, expect to likely pay more.

Budgets, health risks, and risk tolerance are going to dictate the right Medicare Supplement plan for your healthcare. Enrolling in the wrong Medigap plan means that you could overpay for your premium or, worse, find yourself ill-prepared to handle expensive, rising healthcare costs when receiving care.

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6. Missing Your Special Enrollment Period When Losing Creditable Coverage

Just because you have creditable coverage doesn’t mean you always will. Furthermore, if you do have creditable coverage through a spouse who is still working or your own job, layoffs happen, employers change coverages, and best of all, there is the sweet life of retirement.

However, this doesn’t mean you should go without health coverage, nor does it mean you have to. Qualifying life events will provide you with a Medicare Special Enrollment Period (SEP). During this time, you can enroll in Medicare coverage without suffering a penalty. Let’s break down what this usually means:

  • Medicare Part B is available for qualified beneficiaries who previously had creditable coverage. If you wish to enroll, you must do so within eight months of losing your creditable coverage.
  • If you lose coverage for your medication, you can also switch to either another plan that would qualify for creditable coverage or enroll in a standalone Medicare Part D Prescription Drug Plan. You have two entire months for your SEP from the time you either are notified that you are losing coverage or lose it altogether.

So, why is it a problem to miss enrollment during your SEP? There are several ways your healthcare coverage and bank account can be affected:

  • Remember the Medicare Part B and Part D penalties we mentioned before? If you don’t sign up during your SEP, you’re going to face these permanent additional costs as a result.
  • If you don’t have Part D coverage and fail to enroll during your SEP, you’ll have to wait until the Medicare Annual Enrollment Period (AEP) held annually from October 15 to December 7. Therefore, depending on when you lose coverage, you may go without it for quite some time.

7. Going to an Out-Of-Network Doctor With a Medicare Advantage Plan

Medicare mistakes typically cost you money and hinder your healthcare experience. Such is the case when using a healthcare provider that is outside of your Medicare Advantage plan’s network. This highlights again the reason that you must conduct due diligence and compare plans, along with comparing Medigap plans, to see which is the right one for you.

When you go out of your Medicare Advantage plan’s network to receive care, you’re risking the following issues:

  • If you need care outside of your plan’s network, you may not be able to use your full coverage. In fact, you may not have any coverage at all and will need to face your medical expenses out of pocket.
  • In the event you need to receive care from someone who isn’t in your plan’s network, be prepared to seek permission to do so.

Emergencies are a different situation, but there are still many different medical needs that can arise that may present this problem. If you travel often or have a need that may require you to go outside of your Medicare Advantage plan’s network, you may want to consider Medicare Supplement coverage.

8. Not Enrolling in Medicare Part D (Even if You Don’t Take Prescription Drugs)

The 10 costly Medicare mistakes may be connected here and there, but each represents a real-life scenario that may make sense on the surface but, on a deeper level, can lead to trouble. This is exactly what happens to beneficiaries who don’t enroll in Medicare Part D coverage because they aren’t taking prescription drugs.

Not enrolling may feel like a good idea to save on the monthly premium, but healthcare needs change. Just because you don’t need coverage today doesn’t mean you won’t tomorrow. Before you decide to avoid signing up for Part D coverage, remember the following:

  • Delaying Part D enrollment means you’ll have to deal with that pesky penalty when you do.
  • You also can’t simply sign up for Part D if you are outside of your Initial Enrollment Period (IEP) or SEP until AEP in the fall.
  • If you develop a medical condition and need to be prescribed drugs in the future, your penalty will still apply. You’ll also have to wait for fall’s AEP to receive coverage.

It’s easy to see how failing to enroll in a Medicare Part D Prescription Drug Plan can be costly to your finances and detrimental to your health. Enrolling as soon as you are eligible is the best way to make sure your medication costs remain as low as possible.

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9. Keeping the Same Medicare Part D Plan Every Year

The old cliché goes that “the only constant there is, is change,” and this is well represented in healthcare. Not only do your own needs change, but the coverage you enroll in can change each year. Medicare Part D Prescription Drug Plans operate differently yearly. Here are some ways how:

  • Premiums: You’re going to have premium changes each year, and yes, you can expect prices to rise with the cost of healthcare. Thankfully, there is a cap of 6% year-over-year premium increase in place beginning in 2024, according to the Centers for Medicare & Medicaid Services (CMS).
  • Coverage: The drugs covered in year A may not necessarily be a part of your plan in year B. This is another reason why it’s important to review your plan each year to ensure that your formulary is still covering the medications you need.
  • Legislation: How your coverage operates can be changed by the government each year as new legislation is unveiled. This can be a wide range of changes, with the Premium Stabilization cap from CMS listed above as a prime example.
  • Your Health: Perhaps you’re on a new medication. Maybe you no longer need to take a prescription. Either way, healthcare needs can change over time, and if you stay with the same Part D plan, you may be enrolled in coverage offering too much coverage, too little coverage, costing too much, or another unfortunate combination.

Not comparing your options each year means that you could be leaving money on the table or not having adequate coverage. Be sure to review your Part D plan annually to confirm that you have the right coverage for your needs.

10. Earning Excessive Income After Retirement

There are more ways than ever to generate income these days. The power of the Internet has created new opportunities, expanded old ones, and evolved offline opportunities. This is exciting, considering studies show that 62% of those retiring plan to work in some capacity.

However, this is an important point to remember because if you have too much income after retirement, it’s going to affect how much you pay for Medicare. Specifically, it will affect your Income Related Monthly Adjustment Amount (IRMAA), which can elevate your premiums:

  • IRMAA is a cost if your annual modified adjusted gross income (MAGI) is higher than is allowed.
  • For most, Social Security will deduct premiums for Medicare Parts B and D before receiving it in their accounts. For others paying quarterly, IRMAA still applies. Everyone with the charge must pay it monthly.
  • Certain beneficiaries may have special circumstances in which IRMAA doesn’t apply. You can get it appealed or recalculated. This is particularly important for those who have a drastic decrease in income post-retirement.

If you’re concerned about your income and how it will affect your premiums, we can help you by doing the heavy lifting for you. Simply click how to calculate IRMMA to see the Medicare costs you will pay according to your income.

Being ill-prepared can lead to surprising, excessive Medicare costs. Working with your financial team and your insurance agent can help you better understand your specific financial situation. If you’re still working at 65, avoid this Medicare mistake by planning ahead.

How To Avoid the 10 Costly Medicare Mistakes

Avoiding the 10 costly Medicare mistakes is important to get the most out of your coverage and to make sure you aren’t spending too much money on it. The good news is that there are several solutions available. Here are the steps to avoid Medicare mistakes:

Plan Ahead for Your Medicare Enrollment

Planning is the first and most critical step for any Medicare beneficiary. Many of the mistakes people make when signing up for Medicare coverage are due to a lack of planning. Be sure you’re ready before you become eligible for Medicare. That way, you can hit the ground running when you do.

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Conduct Due Diligence Before Enrolling

It’s one thing to plan, but you’re also going to have to understand your options. If there is one thing that bears repeating, it’s that there are different needs for different people. Addressing your specific needs is critical, and the best way to do this is through researching your options, comparing plans, and shopping around for the lowest premiums.

Work With a Professional

Finally, working with a professional licensed insurance agent is a great way to ensure you’re getting the resources and information you need. This will allow you the chance to find coverage options in your area and determine not only which works for your budget but also your healthcare.

Avoiding the 10 costly Medicare mistakes will set you up with affordable coverage, fewer headaches, and the peace of mind of knowing you’re covered for the healthcare you need. Our team is ready to help. Give us a call today at the number above, or press the compare plans button below to explore your options.

Sources

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

  1. Deciding Whether to Enroll in Medicare Part A and Part B When You Turn 65, CMS. Accessed September 2023.
    https://www.cms.gov/Outreach-and-Education/Find-Your-Provider-Type/Employers-and-Unions/FS3-Enroll-in-Part-A-and-B.pdf
  2. CMS Releases 2024 Projected Medicare Part D Premium and Bid Information, CMS. Accessed September 2023.
    https://www.cms.gov/newsroom/fact-sheets/cms-releases-2024-projected-medicare-part-d-premium-and-bid-information
  3. Average Retirement Income: What Is a Good Income for Retirees?, Annuity. Accessed September 2023.
    https://www.annuity.org/retirement/planning/average-retirement-income/
Kayla Hopkins

Kayla Hopkins

Content Editor
Kayla Hopkins is an accomplished writer and Medicare guru serving as the Editor of MedicareFAQ.com. Upon completing her Communications degree from Ohio University, Kayla dedicated her time to understanding the ever-evolving landscape of healthcare. With her extensive background as a Licensed Insurance Agent, she brings a wealth of knowledge and expertise to her writing.
Ashlee Zareczny

Ashlee Zareczny

Compliance Manager
Ashlee Zareczny is the Compliance Manager for MedicareFAQ. As a licensed Medicare agent in all 50 states, she is dedicated to educating those eligible for Medicare by providing the necessary resources and tools. Additionally, Ashlee trains new and tenured Medicare agents on CMS compliance guidelines. Ashlee is a Medicare expert who specializes in Medicare Supplement, Medicare Advantage, and Medicare Part D education.

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