7 Medicare Mistakes That Could Cost You and How to Avoid them

Medicare covers most of your health care costs once you turn 65, but its rules can be tricky, and mistakes can be expensive. Without making the right decisions to cover gaps, you might face high premiums and significant out-of-pocket expenses. Even worse, missing important Medicare deadlines could leave you without coverage, cause you to lose out on tax benefits, or result in lifelong penalties.
Here are some common Medicare mistakes to avoid:
1. Letting Your Medicare Part D Plan Run on Autopilot
Medicare Part D and Medicare Advantage open enrollment happens every year from October 15 to December 7, making it the perfect time to review your plan options. If you’ve started taking new medications or your prescriptions have gone generic, switching plans might save you money.
Costs and coverage can change significantly each year — some plans raise premiums, increase your share of drug costs, introduce new restrictions, or limit you to specific pharmacies for the best rates.
During open enrollment, it’s easy to compare available plans in your area. Use the Medicare Plan Finder, input your medications and dosages, and see how much you’ll pay for premiums and co-pays with different plans.
2. Using Out-of-Network Providers in Your Medicare Advantage Plan
If you have a Medicare Advantage plan, staying within the plan’s network of doctors and hospitals is usually key to getting the lowest co-pays. Some plans may not cover out-of-network providers at all, except in emergencies. Like with any PPO or HMO, it’s important to check each year that your doctors and hospitals are still in the network.
You can switch Medicare Advantage plans during the open enrollment period from January 1 to March 31, in addition to the main enrollment period from October 15 to December 7. Use the Medicare Plan Finder to compare out-of-pocket costs for your health needs and medications. After narrowing down your options, confirm with both the insurer and your doctor that they’re in the network for the upcoming plan year.
3. Missing the Initial Enrollment Period (IEP)
One of the biggest mistakes is missing your Initial Enrollment Period. This can result in delayed coverage and late enrollment penalties. Make sure to mark your calendar when you turn 65 to avoid this common pitfall. If you’re already receiving Social Security benefits, you’ll be automatically enrolled in Part A and Part B, but if not, you’ll need to actively sign up.
4. Not Comparing Original Medicare and Medicare Advantage Plans
Choosing between Original Medicare and a Medicare Advantage plan is a major decision that depends on several factors, such as your healthcare needs, the insurance accepted by your doctors, where you live, how often you travel, and your financial situation.
Original Medicare, provided by the federal government, includes Part A for hospital coverage and Part B for outpatient services like doctor visits. However, it doesn’t include prescription drug coverage (Part D), so you’ll need a separate plan for that unless you have other coverage. Original Medicare also has no cap on annual out-of-pocket costs.
Medicare Advantage, offered by private insurers, includes Part A, Part B, and often Part D, along with additional benefits like dental and vision coverage that Original Medicare doesn’t offer. These plans come with different costs and rules, including prior authorization requirements and network restrictions. With Medicare Advantage, you may pay more or receive limited coverage if you go outside the network, except for emergencies. Unlike Original Medicare, Medicare Advantage plans have an annual out-of-pocket limit, providing some financial protection.
5. Selecting a Medicare Advantage Plan Without Checking Your Providers
Medicare Advantage plans usually operate within specific provider networks, and the rules can vary depending on the type of plan you choose.
For instance, a Health Maintenance Organization (HMO) plan generally won’t cover out-of-network providers except in emergencies, while a Preferred Provider Organization (PPO) plan may impose higher copayments for out-of-network doctors compared to in-network providers. It’s important to verify whether your healthcare providers are part of the plan’s network and to understand what coverage is available if you need to go out of network.
6. Choosing a Plan That Doesn’t Cover Your Medications
When selecting a prescription drug plan, ensure it includes coverage for all the medications you take. Each Medicare Part D plan has a list of covered drugs, known as a formulary. If your medication isn’t listed, you may need to request an exception, pay out of pocket, or appeal the decision. Keep in mind that formularies can change, so during the Medicare open enrollment period from October 15 to December 7, be sure to review your plan’s formulary to confirm that your prescriptions are covered at a price you can manage.
Additionally, check for any restrictions on coverage. Some plans may require prior authorization before covering certain medications, even if they are prescribed by your doctor. You should also see if you can save money by using a preferred pharmacy.
7. Assuming You Can’t Afford Medicare
Many people mistakenly believe that having a limited income means they cannot afford Medicare. However, there are programs available that can help reduce your Medicare costs:
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Medicare Savings Programs (MSPs): There are three types of MSPs that assist with paying the monthly Part B premium and help with cost-sharing, depending on the specific program. To find out if you qualify for an MSP, contact your State Health Insurance Assistance Program (SHIP).
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Extra Help: This federal program provides assistance with the costs of Part D prescription drug coverage. To learn about your eligibility for Extra Help and to begin the application process, reach out to the Social Security Administration at 800-772-1213 or visit their website.
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State Pharmaceutical Assistance Programs (SPAPs): Some states offer SPAPs to help eligible individuals afford their prescription medications. Check the list of assistance programs on Medicare.gov or contact your SHIP to see if there’s a program available in your state.
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