How to Avoid 10 Common Medicare Mistakes

Though Medicare covers most of your health care costs when you’re 65 or older or have an eligible disability, confusing enrollment periods and decisions about which coverage works best for you can complicate the sign-up.

Missing deadlines, delaying enrollment or choosing the wrong plan can cost you. Here are 10 mistakes new Medicare enrollees often make and how to avoid them..

1. Not signing up for Medicare at the right time

Not automatic. You won’t be automatically enrolled in Medicare at age 65 unless you receive Social Security benefits at least four months before your 65th birthday.

If you bought a health plan through the Affordable Care Act insurance marketplace, your premium subsidies end after you’re eligible for Medicare Part A at age 65. And you can’t file for your Medicare card any time you want.

If you wait too long, you could pay a monthly late enrollment penalty for Medicare Part B for the rest of your life. A 10 percent penalty could be levied for each full year you go without Part B after you’re eligible to sign up.

The fix. If you don’t qualify for automatic enrollment, make sure to sign up during your seven-month initial enrollment period, which starts three months before the month you turn 65 and ends three months after.

If you live in Puerto Rico and receive Social Security benefits at least four months before your 65th birthday, you’ll get only Part A automatically. You’ll have to sign up for Part B.

If you’re older, you’ll get another opportunity during Medicare’s general enrollment period, Jan. 1 through March 31. And if you or your spouse is still working and has health insurance through that job at a business with 20 or more employees, you could qualify for a special enrollment period to sign up later without penalty.

2. Missing your special enrollment period

Limited-time offer. After you stop working and lose your job-based health insurance, or when the coverage you have through your spouse ends, you’ll have a few months to sign up for Medicare Part B without penalty. That’s what Medicare calls a special enrollment period.

Medicare doesn’t count retiree health insurance or COBRA extended coverage as job-based insurance, even though those options continue policies you used while working.

The fix. Keep an eye on the calendar. If you know when you or your spouse will be leaving the job that provides health insurance, you can sign up for Medicare in advance of that final day at work and have coverage start up to three months later. If you wait longer, you have eight months from the month you left or from the time your company insurance ended to enroll. Remember, being offered retiree health insurance or COBRA doesn’t matter in this calculation.

3. Delaying sign-up when your job insurance is second in line

A potential coverage gap. You may think that if you or your spouse works and you’re covered with health insurance through that job, you don’t have to think about Medicare during your initial enrollment period.

But many companies with fewer than 20 workers designate Medicare as their primary health coverage when an employee reaches 65. In that case, your job-based insurance will pay for medical claims only after Medicare has paid its share.

If you haven’t signed up for Medicare, you could be the one paying first, footing a big bill that Medicare would have covered. Your company plan would pick up a smaller amount, and you may still have to pay more afterward if your company plan has deductibles and other cost sharing.

The fix. If your employer is small, you may need to sign up for Medicare at 65 during your initial enrollment period. Check with your benefits manager because small businesses can choose whether to make their insurance first in line to pay or second.

4. Misunderstanding late enrollment penalties

​​Part B. For every 12 months you delay Medicare Part B past your initial enrollment period, you could get a 10 percent late fee on your monthly premium.

Part D. You may 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. This 1 percent-per-month penalty can happen even if you take no prescriptions now.

The fix. The Part B late enrollment penalty won’t apply if you or your spouse has job-based insurance with a company of 20 or more employees. Sign up for Medicare during your eight-month special enrollment period after you lose that insurance to stay clear of any extra charges.

You won’t have to pay the Part D penalty if you can show Medicare that you had drug coverage as good as 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 qualifying drug coverage, called “creditable” coverage.

If you lose your prescription coverage, you’ll be eligible for a two-month Part D special enrollment period, which allows you to sign up for a drug plan without penalty. That’s a much smaller sign-up window than for Part B.

5. Not comparing original Medicare and Medicare Advantage

Tough to change later. People have opinions about health insurance — or maybe they gravitate toward a concept that feels familiar.

But they might not study the pros and cons of original Medicare and Medicare Advantage plans based on their life and health care needs. The decision you make before you’ve had a lot of experience with Medicare can be difficult to undo 20 years or even five years later.

The fix. Look now at your health care needs, the insurance your doctors accept, where you live, whether you travel often and your financial situation. Anticipate what you might need in the future, in part based on any chronic conditions you have and the experiences of older members of your family. This seven-step, printable checklist can help, along with this information:

• Original Medicare is insurance coverage managed through the federal government: Part A covers hospital costs, and Part B deals with doctor visits and other outpatient services. It doesn’t include Part D prescription coverage, so you must 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. But purchasing a private insurer’s Medigap plan, finding out if you have a company retiree health plan or checking about eligibility for your state’s Medicaid program can help.

• Medicare Advantage is a private insurance alternative to original Medicare that offers Part A, Part B and usually Part D benefits. You must be enrolled in Parts A and B to opt for one of these plans.

Medicare Advantage plans may have extra benefits that original Medicare doesn’t cover, such as dental or vision care. And they have some different costs and rules than original Medicare.

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