Some states have their own rules governing Medigap policies, so if you made this mistake and didn’t sign up during your enrollment period, check with your State Health Insurance Assistance Program (SHIP) to ask about state-specific Medigap rights.
7. Not understanding your out-of-pocket costs
Although Medicare pays the lion’s share of the medical costs for its enrollees, you need to be prepared for sometimes substantial out-of-pocket costs. Here’s a rundown:
- Premium: Each part of Medicare may have its own monthly premium. Most people have no premium for Part A, which covers hospital services. You will be responsible for the Part B premium, which will be deducted from your monthly benefit if you are collecting Social Security. If you enroll in a Medicare Advantage (MA) plan or a Part D plan, you may also owe a monthly premium, depending on the plan you select.
- Deductible: Before Medicare starts paying for the cost of your care, you may have to pay a flat amount, called a deductible. Parts A and B in original Medicare have annual deductibles, and some MA and Part D prescription drug plans also have deductibles. Medigap policies often cover original Medicare deductibles.
- Copayment: This is a fixed amount you pay for specific services. For example, under MA plans you may have a copay — usually around $25 — every time you see a doctor or get another medical service.
- Coinsurance: This is where your plan will charge you a percentage of the cost of a medical visit or service. If you have original Medicare, you will owe 20 percent of the cost of the service. So, if you get a blood test that costs $100, Medicare will pay $80 and you’ll be responsible for $20. Medigap policies also usually cover your 20 percent share.
Note: If you have original Medicare, you should 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. If you see nonparticipating providers, they can charge you up to 15 percent more than Medicare’s approved rate. If you have an MA plan, you should try to go to a network provider because some MA plans won’t cover out-of-network care at all, and others will pay less if you go out of network.
8. Choosing a Medicare Advantage plan that doesn’t include your health care providers
Mistakes at a Glance
- Missing the enrollment window
- Botching the special enrollment window
- Misunderstanding your job’s insurance
- Ignoring late enrollment penalties
- Not fully weighing your options
- Delaying a Medigap buy
- Not understanding your out-of-pocket costs
- Picking a plan that doesn’t have your doctors
- Taking a drug plan that doesn’t meet your needs
- Assuming you can’t afford Medicare
Each type of Medicare Advantage plan has different network rules. Most plans are either health maintenance organizations (HMOs), which often require referrals to specialists and rely on primary care physicians to coordinate a patient’s care, or preferred provider organizations (PPOs), which have networks of doctors, hospitals and medical facilities that contract with a plan to provide services. Your costs are typically lowest when you use in-network providers and facilities, regardless of your plan.
If you decide to enroll in an MA plan, check with your providers to learn which plans they accept. If you have questions, contact your plan for more information. If your providers are not in the plan’s network, check to see how much, if anything, the plan will pay for their services.
9. Choosing drug coverage that doesn’t fully and affordably cover your prescriptions
Whether you’re planning to get your prescriptions covered through a stand-alone Part D plan or under a Medicare Advantage plan, take some time to learn about the rules, what drugs are covered and what your costs will be.
Make sure your plan covers your needed drugs. Each Part D plan has a list of covered drugs, called a formulary. If your drug is not on your plan’s formulary, you may have to request an exception, pay out of pocket for the cost, or file an appeal. Remember, plans can change formularies so during the fall Medicare open enrollment period you should check your plan's formulary to make sure your prescriptions are covered and at a price you can afford.
Also find out whether your plan places any restrictions (sometimes called utilization management strategies) on coverage. Some plans may place a restriction on a certain drug, but others may not. One restriction might be requiring you to get prior approval from the plan before it will pay for a particular drug. Another example of a coverage restriction is step therapy, which means your plan requires you to try other, less expensive drugs before it will cover a more expensive medicine that you may need.
You should also take a look at whether the plan you’re considering will give you a good deal at the pharmacy of your choice — or through mail order. Each Part D plan has a network of pharmacies that include both preferred and non-preferred pharmacies. You typically pay less for your prescriptions at preferred pharmacies.
10. Assuming you can’t afford Medicare
If you have a limited income, you may be able to get assistance with your health costs through certain programs.
Medicare Savings Programs (MSPs) help pay the monthly Part B premium and may help with Medicare cost sharing, depending on the program (there are three types of MSPs). Contact your SHIP at shiphelp.org to learn if you are eligible for an MSP.
Extra Help is a federal program that helps pay for some to most of the costs of Medicare Part D prescription drug coverage. Contact the Social Security Administration at 800-772-1213 or visit the SSA website to learn if you are 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. Contact your SHIP at shiphelp.org to learn if there is an SPAP in your state.
Video: What Are the Biggest Mistakes When Signing Up for Medicare?
Editor's note: This story has been updated to reflect new information.
Dena Bunis covers Medicare, health care, health policy and Congress. She also writes the “Medicare Made Easy” column for the AARP Bulletin. An award-winning journalist, Bunis spent decades working for metropolitan daily newspapers, including as Washington bureau chief for the Orange County Register and as a health policy and workplace writer for Newsday.