4 Medicare Mistakes That Can Cost You Money
Table of Contents:
- Enrolling Late
- Choosing the Wrong Part D Plan
- Automatically Sticking to the Same Part D plan
- Going Out-of-Network with Medicare Advantage
Medicare provides health benefits to millions of seniors, but if you’re not careful, you could end up costing yourself more money than necessary. Here are four Medicare blunders it pays to avoid at all costs.
1. Enrolling Late
Your initial window to sign up for Medicare spans seven months. It begins three months before the month of your 65th birthday, and it ends three months after that month. If you don’t sign up during your initial enrollment period, you can do so during Medicare’s general enrollment period of January 1 through March 31. However, for each 12-month period you go without coverage under Part B, you’ll face a lifelong penalty that tacks 10% onto your monthly premiums.
Currently, the standard monthly premium for Part B is $135.50, so at this rate, you’d be looking at an additional $13.55 a month, or $162.60 per year, which is costly for someone on a fixed retirement income.* That’s why it pays to sign up for Medicare on time, which you can do online for added convenience.
2. Choosing the Wrong Part D Plan
When you enroll in Medicare, you don’t get a choice in Parts A or B, which cover hospital care and diagnostic/preventive care, respectively. However, you do get a say in the Part D prescription plan you choose, and it pays to consider your choices wisely. Some plans charge lower monthly premiums, but come with limited pharmacy choices. Other seemingly low-cost plans might classify the prescriptions you take in a manner that makes your copays more expensive, so do your research before you commit to a Part D plan.
3. Automatically Sticking to the Same Part D plan
You’re allowed to switch Part D plans during Medicare’s annual open enrollment, which runs from October 7 through December 15. While sticking with your existing plan can save you some legwork, it could also cost you money. That’s because each Part D plan has a formulary that assigns different medications to different tiers. The higher the tier, the higher your prescription costs. Plan formularies can shift from one year to the next, so you must review your plan’s notice of change letter to see if its new formularies hurt you, and, if so, consider a switch.
At the same time, assess your prescription needs annually. If you’re currently paying a higher Part D premium to save on copays, but your doctor switches you to a different medication that costs less to begin with, it could make sense to switch to a lower-cost plan.
Learn more about Part D coverage at Medicare Resources.
4. Going Out-of-Network with Medicare Advantage
If you sign up for a private Medicare Advantage plan instead of original Medicare, you’ll need to use that plan’s approved network of providers, or otherwise risk heftier costs. In fact, some Advantage plans won’t cover out-of-network services at all, with emergency care being the exception. Pay attention to the providers you use, and aim to stay in-network to avoid additional fees.
Adding to your Medicare bills will only put a strain on your limited financial resources in retirement. Steer clear of these mistakes to avoid stress and budgetary issues at the same time.
Maurie Backman has been writing about personal finance and healthcare for well over a decade. Her articles have appeared on The Motley Fool, CNN Business, USA Today, and MSN. Maurie is a Binghamton University graduate who enjoys reading, hiking, watching hockey, and rejoicing in the fact that her creative writing degree actually amounted to something.
* Anonymous, (October, 2018). 2019 Medicare Parts A & B Premiums and Deductibles. Center for Medicare & Medicaid Services. Retrieved October, 2019