Key Takeaways

• Medicare has multiple parts, and each one covers different healthcare services. Understanding what each part includes helps you avoid unexpected costs.

• Making the wrong choices when you first enroll can result in lifelong penalties and limited options later. Know your deadlines and plan carefully.

Understanding Medicare: Avoid These Costly Mistakes

1. Not Knowing the Difference Between Medicare Parts A, B, C, and D

Medicare isn’t just one simple health plan—it’s divided into several parts, each covering different aspects of healthcare. If you’re new to Medicare, knowing what each part does can help prevent expensive surprises.

Medicare Part A (Hospital Insurance)

• Covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care.

• Most people qualify for premium-free Part A if they or their spouse worked and paid Medicare taxes for at least 10 years.

• You still have out-of-pocket costs, including deductibles and coinsurance.

Medicare Part B (Medical Insurance)

• Covers doctor visits, outpatient care, preventive services, and durable medical equipment.

• You pay a monthly premium, an annual deductible, and a percentage of your medical bills (typically 20%).

• If you don’t sign up for Part B when you first become eligible, you may face a permanent late enrollment penalty.

Medicare Part C (Medicare Advantage)

• These are private health plans that combine Parts A and B and often include Part D (prescription drug coverage).

• Plans may offer additional benefits like dental, vision, and hearing, but costs and coverage vary.

• Unlike Original Medicare, these plans have network restrictions and may require referrals.

Medicare Part D (Prescription Drug Coverage)

• Helps pay for prescription medications.

• Requires a separate premium unless included in a Medicare Advantage plan.

• If you don’t enroll when you’re first eligible, you could face a late enrollment penalty.

2. Missing Important Enrollment Deadlines

One of the biggest Medicare mistakes is missing enrollment deadlines, which can lead to penalties and gaps in coverage.

Initial Enrollment Period (IEP)

• Begins three months before you turn 65, includes your birthday month, and continues for three months after.

• This is your best time to enroll in Medicare without facing late penalties.

General Enrollment Period (GEP)

• Runs from January 1 to March 31 each year for those who missed their IEP.

• Coverage begins July 1, and you may have to pay late penalties.

Medicare Advantage & Part D Open Enrollment

• From October 15 to December 7, you can switch Medicare Advantage or Part D plans.

• Coverage changes take effect January 1 of the following year.

Special Enrollment Periods (SEPs)

• You may qualify for an SEP if you delay Medicare because of employer coverage or other circumstances.

• SEPs allow you to enroll without penalties when you lose employer insurance or have another qualifying event.

3. Ignoring the Costs and Potential Penalties

Medicare isn’t free, and failing to understand the costs involved can lead to significant financial strain.

Late Enrollment Penalties

• Part B: Your premium increases by 10% for every 12-month period you were eligible but didn’t sign up. This penalty lasts for life.

• Part D: A permanent penalty is added to your monthly premium if you go 63 days or more without prescription drug coverage after your initial enrollment period.

Understanding Out-of-Pocket Costs

• Medicare covers a lot, but you still pay deductibles, copays, and coinsurance.

• You may need additional coverage to help with these costs.

4. Assuming Medicare Covers Everything

Medicare does not cover all healthcare expenses, and many beneficiaries are caught off guard by services they must pay for out-of-pocket.

What Medicare Doesn’t Cover

• Long-term care (nursing home care beyond short-term rehabilitation)

• Routine dental, vision, and hearing care

• Most prescription drugs (unless you have Part D or a Medicare Advantage plan that includes it)

• Overseas medical expenses

How to Fill the Gaps

• Consider additional insurance like Medigap or a Medicare Advantage plan.

• Explore programs that help lower costs, such as Medicare Savings Programs or Extra Help for prescription drugs.

5. Not Reviewing Your Medicare Coverage Annually

Your health needs change over time, and so do Medicare plans. Sticking with the same coverage every year without reviewing it could cost you more than you realize.

Why You Should Review Your Plan Every Year

• Premiums, deductibles, and copays change annually.

• Your medications may no longer be covered under your current Part D plan.

• You might need new benefits, such as dental or vision, that your current plan doesn’t provide.

• New plan options might offer better coverage at a lower cost.

How to Review and Make Changes

• Medicare’s Open Enrollment Period (October 15 – December 7) allows you to compare and switch plans.

• Review your Annual Notice of Change (ANOC) from your plan provider each fall.

• Contact a licensed Medicare agent for guidance—agents listed on this website can help you explore your options and ensure you have the right coverage.

Make Informed Medicare Choices to Avoid Costly Mistakes

Medicare is an essential part of your healthcare coverage, but making uninformed decisions can lead to high out-of-pocket costs and permanent penalties. Understanding how Medicare works, knowing your enrollment periods, and reviewing your coverage each year can help you avoid expensive mistakes. If you’re unsure about your options, speaking with a licensed Medicare agent listed on this website can help you find the best plan for your needs.