Medicare insures millions of older Americans, but it’s a complex program that requires seniors to research their options when first enrolling and every year after during the renewal period.
Because this task can be so daunting, you might be tempted to put it off for as long as possible. However, procrastinating can be a costly error.
We’ve outlined the top 13 mistakes people tend to make during their Medicare enrollment period and how to avoid them.
1. Not Signing Up on Time
Time is of the essence with Medicare. The initial enrollment period for Medicare is a seven-month window: three months before your 65th birthday, the month that you turn 65 and the three month-period after your birth month. If you fail to enroll for Medicare Part A and/or B, also known as original Medicare, during the initial enrollment period, you’ll get another chance during the fall open enrollment period, which runs from October 15 to December 7 each year.
The Problem: “There’s a financial penalty for missing that window that increases the more you wait,” says Dr. Elizabeth Landsverk, a geriatrician based in the San Francisco area.
The Solution: Pay attention to any mailings you receive from the Centers for Medicare and Medicaid Services and any existing health insurance plan as you approach your 65th birthday.
[Read: Medicare Enrollment Deadlines You Shouldn’t Miss.]
2. Not Signing Up During the Special Enrollment Period
Just as the initial enrollment period is critical, so is the special enrollment period, which kicks in during specific circumstances, such as:
— After turning 65, you retire or lose employer-sponsored health insurance coverage through your spouse.
— You move to a new address outside your current plan’s service area or your move allows for new plan options.
— You’ve just moved out of an institution, such as a skilled nursing facility, or been released from jail.
— You were previously eligible for both Medicaid and Medicare but lost your Medicaid eligibility.
The Problem: If you miss these limited windows of opportunity, you’ll have to pay a penalty, which can be costly and may limit your options for getting the care you need later.
The Solution: Make sure you’re aware of enrollment dates.
[Read: Medicare Fall Open Enrollment: What You Need to Know.]
3. Not Enrolling in a Stand-Alone Medicare Part D Prescription Drug Plan With Original Medicare
Medicare consists of several parts, including Medicare Part D, which covers prescription drugs.
The Problem: If you fail to enroll in a Part D prescription drug plan and do not have other creditable prescription drug coverage, such as a plan offered by your employer or through the Veterans Administration, for more than 62 days, you will pay a late enrollment penalty. That penalty comes in the form of higher premiums for the entire time you remain on Medicare if you decide to get Part D prescription drug coverage later on.
The Solution: Select a Medicare Part D plan even if you’re not using any prescription drugs when you first enroll in the program.
[READ: Medicare Supplement Plan F and Plan G: Should You Switch?]
4. Not Getting Supplemental Coverage on Time
Original Medicare has some big coverage gaps that can be very costly if they aren’t filled when you first enroll.
The Problem: “When first signing up for original Medicare Parts A and B, which leave you with significant coverage gaps, you generally have a six-month window to enroll in other forms of Medicare insurance that can help you fill those gaps,” explains Bob Rees, chief sales officer with eHealth Inc., a health insurance broker and online resource provider headquartered in Santa Clara, California.
The Solution: Opt into additional products or plans that meet your needs and ensure you won’t have large coverage gaps if your health situation declines. A Medicare supplemental insurance policy, also known as Medigap, can help cover out-of-pocket expenses not covered by original Medicare, such as copayments, deductibles and coinsurance.
There is no nationwide annual open enrollment period for Medigap, so you’ll need to enroll in a Medigap policy during the Medigap initial enrollment period in most states. If you neglect to sign up during this enrollment window, health plans can reject your application or charge you higher premiums if you have any health problems.
5. Not Understanding How Medicare Coordinates With Your Current Coverage
If you’re still working when you turn 65, it is essential to determine how your current health insurance and Medicare will coordinate. For example, depending on the size of your employer, Medicare may become your primary insurer, and your work insurance is considered secondary.
The Problem: Medicare will only pay for services not covered by your private insurance plan. With a base premium of $174.70 per month for 2024, you could be spending a lot for a Part B plan that you rarely use.
You could also have difficulty attaining a Medigap policy later if you sign up for Part B while still covered by a private plan.
The Solution: Be sure you understand how any employer-sponsored health insurance plans you have work with Medicare. It’s critical to clarify when and how each plan will cover services and fees. Not knowing whether your employer’s coverage is primary or secondary can cost you a lot of money. Working with an adviser who can guide you on not only your selections but how any Medicare plan you sign up for works with existing insurance can help you avoid those headaches and expenses.
6. Not Educating Yourself on the Differences Between Original Medicare and Medicare Advantage
Not all Medicare plans are the same. There’s a big distinction between Medicare and Medicare Advantage, also known as Part C: Medicare is a government health insurance program for people over the age of 65 and some younger individuals with disabilities who meet certain criteria, while Medicare Advantage is health insurance designed for people over the age of 65, but it’s offered by private health insurance companies.
The Problem: If you don’t understand the difference between Medicare and Medicare Advantage, you could end up spending too much money for a plan that doesn’t fit your needs.
For example, while more providers are likely to accept original Medicare than Medicare Advantage, your out-of-pocket costs may be higher, depending on your health care needs.
Landsverk adds that some Medicare Advantage plans are profit-driven, even if they have nonprofit status, and there have been complaints from members about being denied treatment.
The Solution: Individuals considering a Medicare Advantage plan should ask about utilization rules for services such as MRIs and CAT scans, says Barbara Hopkins, a Portland, Maine-based Medicare educator.
Utilization rules help determine whether a service needs to go through a permission phase before a beneficiary can get a service or see a provider. For example, your insurance plan might decide that you need to undergo physical therapy, try medication and adopt a home exercise program before it will approve an MRI.
“Medicare Advantage receives a set fee from Medicare for patient care, so it behooves them to deny care unless the treatment is absolutely critical,” Landsverk says.
Generally, if you’re healthy and don’t often see a doctor, you might think about a Medicare Advantage plan. However, there are certain circumstances when it might be wise to combine both.
“If somebody sees a doctor quite frequently and if they have a chronic condition, they might want to pair original Medicare with a Medigap plan,” adds Joel Mekler, a health benefits professional, Medicare expert and writer of the Medicare Moments weekly column in New Castle News in Pennsylvania.
Your health can change rapidly, so it is best to consider your potential future health care needs when choosing the best Medicare plan for you. Be wary of flashy commercials, often featuring famous personalities selling Medicare Advantage plans, and carefully compare your options. Working with an expert who’s not affiliated with a specific company or plan can also help you cut through the noise and find the best Medicare or Medicare Advantage plan for you.
7. Not Reading the Small Print on Medicare Advantage Plans
If you do opt for a Medicare Advantage plan, you may have access to benefits that original Medicare doesn’t offer, such as dental and vision coverage, bathroom safety devices and home meal delivery following surgery.
The Problem: While these added perks may be enticing, they can come with lots of strings attached. In fact, some plans make you pick one of the many extra benefits offered or require you to pay an additional plan premium or a large share of the benefits’ costs. Those benefits can also change from year to year.
“I like to think of those extra services as perks or frosting on the cake,” Hopkins says. “They’re definitely attractive and offer more than original Medicare offers. But, for instance, it is probably a limited network for dental care. It is probably a percentage of coverage. Sometimes those in-network providers for dentists come, and they go.”
What’s more, over-the-counter items might be limited to certain lists and sizes, and there may be additional limits on where and how you can use benefits.
The Solution: Ask for details about the add-on benefits to get a clear picture of what they look like. Remember: It’s not wise to choose a health plan based on these perks. Instead, think about your long-term financial and health goals when selecting a plan you’ll be able to stick with for the long run.
8. Not Checking the Insurer’s Formulary
The formulary is a list of all the medications that a plan covers.
The Problem: These formularies change from year to year and can change during the plan year, too, which can make ensuring you’ll be able to access the medications you need tricky. If your doctor prescribes a medication that’s not on the formulary, you’ll either need to pay out of pocket, ask for an exception or file an appeal, all of which can be a hassle and potentially delay care.
The Solution: Whether you enroll in original Medicare and a Part D plan for prescription coverage or a Medicare Advantage plan with drug coverage built into it, ask to see the current formulary before signing on the dotted line.
Because plans can and do change their formularies, it’s good practice to study the formulary of your chosen plan regularly.
9. Selecting the Wrong Drug Plan
This mistake goes hand-in-hand with not checking the plan’s formulary. But even if you do check the formulary, you may find that you’ve ended up in the wrong Part D plan or have selected a Medicare Advantage plan that doesn’t offer the right prescription benefits for your situation.
The Problem: You’ve selected a Medicare Part D plan or a Medicare Advantage Plan that includes prescription drug benefits but later find that a medication you need isn’t listed on the formulary.
The Solution: You can appeal or have your doctor ask for an exception to get a specific drug covered. Alternatively, Part D plans are required to offer a certain number of medications to treat common diseases, so your doctor may be able to substitute a similar medication for the one that’s not covered.
10. Not Researching Which Hospitals and Providers Are Covered by Your Plan
Not all hospitals and providers are included in all Medicare or Medicare Advantage plans, and you need to check that all of the doctors or facilities you anticipate you’ll use are included.
The Problem: Landsverk notes that it’s common to think that because your hospital is in-network, the provider automatically is, but that’s not the case.
For example, if you’re going into surgery, you must first confirm that the hospital and surgeon are both in-network. But it’s also critical to check if the same is true for the anesthesiologist.
“Hospitals today often contract with outside groups, ER docs, radiologists, anesthesiologists, etc., that may not take the same insurances as the hospital, and some may not accept any insurance at all,” Landsverk says.
The Solution: Ask a lot of questions, and be sure you understand which providers and facilities accept your insurance before heading off for care.
11. Signing Up for Automatic Renewal
Medicare and Medicare Advantage plans automatically renew each year, which theoretically makes it simpler for you to ensure you’re always covered by a health insurance plan.
The Problem: The convenience of automatic renewal can come at a steep price in the case of health coverage. When your Medicare Part D prescription drug or Medicare Advantage plan automatically renews every year on January 1, you may find that your benefits and drug formulary have changed. In some cases, this can be very costly because a benefit or drug you need may no longer be covered and you’ll have to pay out of pocket for it. Plan premiums, deductibles, copayments and coinsurance can also change from year to year.
The Solution: Take the time to review your plan’s Annual Notice of Change, which you will receive each September, to ensure that the plan still meets your needs at the lowest possible cost.
12. Overlooking Out-of-Pocket Expenses
There’s more to paying for health insurance than just your monthly premium. When comparing plans, don’t overlook the exact amounts you’ll be expected to pay out of pocket for various services and procedures.
The Problem: You could end up paying a lot more out-of-pocket costs than you expected when you use your benefits.
The Solution: Do the math. When considering a specific plan and comparing one policy to another, be sure to tally up all of the various copays, deductibles and coinsurance fees you’ll be responsible for before selecting a plan. This will not only allow you to see exactly how much you’ll be on the hook for, but it can also help you develop an annual budget so you can better manage your expenditures.
“It’s also important to look at costs holistically,” Rees says. “Costs can differ significantly among Medicare supplement, Part D and Medicare Advantage plans. Monthly premiums are important, of course, but, for any plan you consider, it’s just as important to look at the out-of-pocket costs you may face when you get medical care.”
13. Doing It Alone
Landsverk says a major pitfall is trying to sort through all of the options on your own.
The Problem: Unless you’re an expert in Medicare, it’s difficult to compare all the options and determine exactly which plan is right for your situation.
Solution: Look for an independent adviser or a Medicare broker to assist you. You can call 1-800-MEDICARE or visit Medicare.gov as a starting point. Working with a licensed health insurance agent, preferably one that offers multiple plans from competing insurance companies, is a great way to avoid making mistakes.
“It doesn’t cost anything extra to work with an agent, but an agent can answer your questions and offer personal assistance and advice to help match you with the right plan for your needs and budget,” Rees adds.
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The Most Common Medicare Mistakes and How to Avoid Them originally appeared on usnews.com
Update 04/09/24: This story was published at an earlier date and has been updated with new information.
