Getting started with Medicare can be confusing and overwhelming. You can overpay for Medicare if you make mistakes when choosing a plan.

We list ten costly mistakes seniors make when enrolling in a new Medicare plan.

Medicare Mistakes at a Glance

  1. Delaying Medicare sign up
  2. Signing up for Medicare at the wrong time
  3. Ignoring Part B and Part D late enrollment penalties
  4. Overlooking Medicare enrollment when you have employer insurance
  5. Failing to consider Medicare Advantage plans
  6. Not checking if Medicare Advantage includes your providers
  7. Postponing buying a Medicare supplement policy
  8. Focus only on premium costs and fail to review out-of-pocket costs
  9. Taking a drug plan that doesn't meet your needs
  10. Assuming you can't afford Medicare

Mistake 1: Delaying Medicare Sign Up

Medicare only permits enrollment during specific periods throughout the year.

The best time to sign up is before or on your 65th birthday. Medicare's Initial Enrollment Period (IEP) begins 3 months before your 65th birthday. It continues through your birth month and ends 3 months after your 65th birthday. It provides a 7-month window to start your Medicare.

If you miss your IEP, you must have a qualifying life event to qualify for the Special Enrollment Period (SEP).

Unfortunately, if you do not enroll during the Medicare-designated Enrollment Periods, you will face a late enrollment penalty.

The government charges a late enrollment penalty for people who postpone joining Medicare Part B. The longer you are eligible for Part B coverage but do not sign up for it, the greater the penalty.

Mistake 2: Signing Up for Medicare at the Wrong Time

Unfortunately, Medicare enrollment is not available all of the time.

You must enroll in Medicare during your Initial Enrollment Period (around your 65th birthday) or the Special Enrollment Period to avoid a late enrollment penalty.

You have another choice. The Annual Enrollment Period occurs from October 15 to December 7 each year. During this time, you can change plans or join a new one.

Alternatively, the General Enrollment Period occurs in the first 3 months of each year. Every eligible individual is permitted to join Medicare at this time. However, it may not necessarily waive the late penalty fees.

Learn more about when you can enroll in Medicare.

Mistake 3: Ignoring Part B and Part D Late Enrollment Penalties

Enrolling in Medicare Part B late can cost you money in the long run. For every 12 months you postpone enrolling, Medicare charges an additional 10% for the monthly premium.

Fortunately, if you have employer-sponsored health insurance or qualify for a Special Enrollment Period, the penalty does not apply.

Mistake 4: Overlooking Medicare Enrollment When You Have Employer Insurance

When you have employer-sponsored health insurance, you might feel confident that you do not need Medicare.

That might be true, but you are wise to register for Medicare Part A, at minimum. You can receive Part A (hospitalization) without a monthly premium, and it will supplement your health plan. However, suppose you wait to set up Part A until you separate from your employer. In that case, Medicare may hit you with a late enrollment penalty.

In other cases, you may need to enroll in Medicare Part B even if you have employer-sponsored health care. For every 12 month period you delay signing up, Medicare charges a 10% surcharge over the standard premium. Fortunately, the penalty is waived if you have employer insurance or you are within your Special Enrollment Period (SEP).

Like Part B, you could also face a late signup fee from Medicare Part D (prescription drugs). The premium may increase by one percent for every 12-month delay. However, if you provide documentation that you recently had similar drug coverage, Medicare does not charge a penalty.

Your employer or insurer can provide you with a "Letter of Creditable Coverage." The letter proves you recently had similar insurance. You can sign up for a new drug plan during a two-month Special Enrollment Period for Part D.

Similarly, some employer insurance looks to Medicare to pay first or act as a primary insurer, then pays its share. Other plans cover the bulk of expenses and send the remainder to Medicare. Then, Medicare is secondary coverage.

Not sure if your employer-sponsored health insurance is primary or secondary? Ask your human resources or personnel department, or call Medicare at 1-800-Medicare.

Mistake 5: Failing to Consider Medicare Advantage Plans

Original Medicare has some shortcomings.

First, the federal government administers the plan. It can be challenging and frustrating to reach them if you have questions about bills or why something was not covered.

Second, original Medicare requires that you pay 20% of all your medical bills. They call this "coinsurance," and there is no limit to how much you spend.

Third, you must buy your own standalone Medicare Part D drug plan since original Medicare does not include prescription medication.

However, any doctor in the US who accepts Medicare will accept your insurance.

As an alternative, Medicare Advantage (aka Medicare Part C) replaces original Medicare Part A and Part B. Often, you can receive this type of plan for no additional monthly premium.

Medicare Advantage plans help cover some or all of your 20% responsibility. You may find plans with low or $0 copays and deductibles.

More robust Medicare Advantage plans add Part D drug insurance, vision, dental and hearing benefits for a modest premium.

We recommend taking time to compare original Medicare with Medicare Advantage plans to see which fits you best.

Mistake 6: Not Checking if Medicare Advantage Includes Your Providers

Typically, Medicare Advantage plans utilize local health care provider networks to keep costs down. They operate HMOs (health maintenance organizations) or PPOs (preferred provider organizations).

HMO plans require the patient's primary care physician to provide a referral for specialist care. PPOs have doctors, clinics, and hospitals' networks, and you can choose where you receive treatment.

You pay the lowest out-of-pocket costs (copays, deductibles, etc.) when you use in-network providers, regardless of the plan type. If you seek treatment outside the network, the plan may pay significantly less or nothing at all toward your care.

Consequently, check with the Medicare Advantage plan before enrolling to find out if it includes your providers. You can also contact your health care provider and find out which plans they accept. If your provider is not part of the plan, you must either pick a different program or a new provider.

Mistake 7: Postponing Buying a Medicare Supplement Policy

Medicare supplements and Medicare Advantage are different types of plans.

Medicare Advantage is entirely run by an insurer and may have limited coverage areas. It wraps Part A, Part B, and Part D into a single program.

By contrast, Medicare supplements are policies issued by insurers. You still receive original Medicare through the federal government. Supplements add a layer of protection to original Medicare, but they do not replace original Medicare.

Medicare requires that you enroll in Medicare Part B (medical insurance) before getting a Medicare supplement.

Medicare supplements help cover the 20% of coinsurance that Medicare Part A and Part B require you to pay.

Letter names designate different Medicare supplement plans, such as Medicare supplement Plan A. This is entirely different from Medicare Part A. Regardless of which insurer issues the supplement policy, all Plan A supplements have identical coverage and benefits. However, premiums can vary between insurers.

The best time to get a Medicare supplement is during the Open Enrollment Period surrounding your 65th birthday. During this period, the insurer is required to accept your application, regardless of any Pre-existing Medical Conditions. Outside that time, insurers can deny coverage.

Mistake 8: Focus Only on Premium Costs and Fail to Review Out-of-Pocket Costs

When shopping for Medicare insurance, some Medicare Advantage plans advertise a $0 monthly premium. However, you must still pay the monthly premium for Medicare Part B and Part A if applicable.

Even if you choose original Medicare and a supplement, you will pay for the Part B premium and supplement premium.

But monthly premiums aren't the only costs to consider. You should also review how much you pay for copays, deductibles, and coinsurance.

A copay is a fixed amount you pay at the time of service. For example, you might have a $10 copay to visit your doctor or a $5 copay for generic drugs.

In addition to a per-visit payment, you pay an annual deductible before Medicare starts covering your care. Typically, you find a deductible on a Medicare Advantage plan for both medical treatment and prescriptions. On the other hand, Medicare supplements help cover the cost of original Medicare deductibles.

Finally, coinsurance is the price of medical services you share with Medicare. If you have original Medicare, you pay 20% of all costs. There is no out-of-pocket maximum, so there is no cap on how much you spend. Fortunately, Medicare supplements typically cover your 20% to save you money down the road. Similarly, a Medicare Advantage plan may also have a deductible. However, some higher premium plans may keep you from paying much, if any, coinsurance.

Mistake 9: Getting a Drug Plan That Does Not Fully Cover Your Medications

Just like choosing a plan that includes your doctor, you need a prescription drug plan that provides for the medications you need.

Most Medicare Advantage plans include prescription drugs, while original Medicare and supplements do not. If you have original Medicare, you must buy a Medicare Part D (medication) plan separately.

Each drug plan has a list of medications called a formulary. The formulary lists a drug and states how much the plan pays for it.

Typically, there are four tiers of coverage. Tier 1 are generally generic prescriptions and only charge you a nominal copay, like $5 or $10. Tier 2 are common and inexpensive brand name drugs. They will cost you more. Tier 3 are pricier brand-name drugs, and you will pay most of the cost. Finally, Tier 4 might not be covered at all, so you would pay the entire price.

If your plan restricts a drug, you may need prior approval from the program before covering it. You can also file an appeal if your doctor determines your medication is necessary but not covered.

One other thing to consider is where you have prescriptions filled. Part D plans have lists of preferred and non-preferred pharmacies, so you pay less at a preferred provider.

Mistake 10: Assuming You Cannot Afford Medicare

Regardless of your income, everyone can get Medicare if they qualify for it. Several programs can help you:

  • Medicare Savings Programs (MSPs) help cover your monthly Part B premium.  In most cases, it also helps pay your share of out-of-pocket expenses. There are three types of MSPs so contact your State Health Insurance Program to find out if you are eligible.
  • Extra Help can assist with the cost of Medicare Part D drugs. Contact the Social Security Administration to learn more.
  • State Pharmaceutical Assistance Programs (SPAPs) help pay for prescriptions in some states. Contact the State Health Insurance Program to find out if you are eligible.

How Do I Know What My Medicare Options Are?

AARDY is the nation's fastest Medicare insurance marketplace. You can compare your Medicare options to find the one that best fits your needs.

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