10 Common Medicare Mistakes to Avoid

4. Not understanding late enrollment penalties

​​For every 12 months you delay Medicare Part B past your initial enrollment period, your monthly premium may be 10 percent higher. The late enrollment penalty won’t apply if you have job-based insurance and sign up for Medicare during your special enrollment period.

You could be subject to a different late enrollment penalty if you don’t sign up for Part D prescription coverage or have similar drug coverage from another source, such as an employer, retiree plan or Tricare military coverage.

You won’t have to pay the Part D penalty if you can show Medicare that you had drug coverage as good as that from a Medicare Part D plan. You should receive a letter from your employer or insurance plan in September each year letting you know if you have comparable drug coverage, called “creditable coverage.”

If you lose your drug coverage, you’ll be eligible for a two-month special enrollment period, which allows you to sign up for a Part D plan without a penalty.

5. Not comparing Medicare and Medicare Advantage plans

The decision to choose ​​original Medicare or a Medicare Advantage plan may be your biggest. What you choose depends on your health care needs, the insurance your doctors accept, where you live, whether you travel often and your financial situation.

Original Medicare is offered through the federal government: Part A to cover hospital costs and Part B for doctor visits and other outpatient services. It doesn’t include Part D prescription coverage, so you have to sign up for a stand-alone plan if you don’t have other drug coverage. Original Medicare doesn’t limit your annual out-of-pocket costs.

Medicare Advantage is a private insurance alternative to original Medicare that offers Part A, Part B and usually Part D benefits. These plans may have extra benefits that original Medicare doesn’t cover, such as dental or vision care, and it has different costs and rules than original Medicare.

Advantage plans frequently have prior authorization requirements and provider networks. They may charge more or not cover care if you see an out-of-network provider except in emergencies. Unlike original Medicare, MA plans have an annual out-of-pocket limit.

6. Delaying purchase of a Medigap policy

​​Medigap is supplemental health insurance that works with original Medicare to pay some out-of-pocket costs that Medicare doesn’t cover, such as Part A’s hospital deductible or Part B’s 20 percent coinsurance. Depending on where you live, you can choose from as many as 10 types of Medigap plans from several insurers.

The best time to buy a policy is during your Medigap open enrollment period, which is six months after you enroll in Part B at 65 or older. Otherwise, Medigap insurers in most states may reject you or charge more if you have a preexisting condition. 

Check with your State Health Insurance Assistance Program (SHIP) about state-specific Medigap rights. 

7. Not being prepared for Medicare’s coverage gaps

​​Although Medicare pays the lion’s share of enrollees’ medical costs, you need to be prepared for substantial out-of-pocket costs. Here’s a rundown: ​​

• Premium. Each part of Medicare typically has its own monthly cost although most people don’t pay premiums for Part A. You’ll be responsible for the Part B premium, and you may have to pay more if you enroll in a Part D plan and Medigap or a Medicare Advantage plan.
• Deductible. Before Medicare starts covering your care, you may have to pay a certain amount. Parts A and B in original Medicare have annual deductibles although some preventive screenings may not be subject to the Part B deductible. Some Advantage and Part D prescription drug plans also have deductibles. Medigap policies often cover the Part A deductible.
• Copayment. With Medicare Advantage plans, you may have to pay a fixed amount, usually around $25, for specific services, such as seeing a doctor or receiving care.
• Coinsurance. If you have original Medicare, you’ll owe a percentage of the cost of a medical visit or service, 20 percent for many Part B services. So if a blood test costs $100, Medicare will pay $80 and you’ll be responsible for $20. Medigap policies usually cover your 20 percent share.

Note: If you have original Medicare, make sure the health provider you see accepts Medicare and takes what is called “assignment.” That means the provider is willing to accept the amount of payment on Medicare’s fee schedule for the service they perform.

8. Choosing an Advantage plan without your providers

Medicare Advantage plans typically have provider networks, and the rules depend on the type of plan.

A health maintenance organization (HMO) may not cover out-of-network providers except for emergencies while a preferred provider organization (PPO) may charge larger copayments for out-of-network doctors than they do for those in their network. Find out if your providers are in the plan’s network and whether you’ll have coverage if you go out of network.

9. Choosing coverage that doesn’t include your drugs

​​When choosing prescription coverage, make sure your plan covers all medications you take. Each Part D plan has a list of covered drugs, called a formulary. If your drug is not on the plan’s list, you may have to request an exception, pay out of pocket or file an appeal. Plans change formularies, so during Medicare’s Oct. 15 to Dec. 7 open enrollment period, check your plan’s formulary to make sure your prescriptions are covered at a price you can afford.

Find out if your plan places restrictions on coverage. The plan may require you to get prior approval before it will pay for a particular drug, even if your doctor prescribes it. And see if you can save money using a preferred pharmacy.

10. Assuming you can’t afford Medicare

​​A common misperception is that limited income means you can’t afford Medicare. Thanks to these programs, you may be able to get assistance with your Medicare costs:

​​​Medicare Savings Programs (MSPs) — three types are available — help pay the monthly Part B premium and help with Medicare cost sharing, depending on the program. Contact your SHIP to learn if you are eligible for an MSP.

Extra Help is a federal program that helps pay the costs of Part D prescription drug coverage. Contact the Social Security Administration at 800-772-1213 or visit the agency’s website to learn if you’re eligible for Extra Help and to start an application.

State Pharmaceutical Assistance Programs (SPAPs) are offered in some states to help eligible individuals pay for prescriptions. Check Medicare.gov’s list of assistance programs or contact your SHIP to learn if a program is your state.

​This story, originally published Oct. 11, 2021, is regularly updated to include new Medicare policy and information.