Senior Looking At Prescripton Drugs In Medicine Cabinet Getty
Image source: Getty Images. 

Social Security may get all of the glory thanks to the monthly paychecks it sends to seniors, but Medicare is playing an increasingly important role in the lives of our nation's retired workers.

According to an Urban Institute study on the expected lifetime Social Security and Medicare benefits of median-income males turning age 65 between 1960 and 2060 in five-year intervals, lifetime Medicare benefits are growing at a faster pace than lifetime Social Security benefits. In 2015, a 65-year-old single male with median earnings could be expected to receive $294,000 in lifetime Social Security benefits and $195,000 in lifetime Medicare benefits. By 2060, the roles are expected to reverse, with a 65-year-old median-income male receiving $531,000 over his lifetime from Social Security and $555,000 from Medicare.

The rapidly rising costs of medical care and prescription drugs are one reason why seniors are expected to receive much more from Medicare in the future. But these rising costs are also cause for concern, as they mean that seniors need to be on their toes when enrolling in prescription drug plans (also known as Part D with original Medicare). If you aren't careful, a prescription drug plan (PDP) with Medicare could wind up costing far more than you expect.

Here are three potential mistakes you need to be aware of that could cause you to spend more on a prescription drug plan with Medicare.

1. Enroll late

Doctor With Worried Senior Patient Getty

Image source: Getty Images.

For those who are perpetually late, being on time for anything seems challenging. But trust me: You don't want to enroll in a PDP late. Otherwise you'll be literally paying for your mistake for the remainder of the years you're enrolled in Medicare.

If you miss your initial enrollment period -- which comprises the three months prior to your 65th birthday, the month of your 65th birthday, and the three months after -- and you maintain 63 continuous days without drug coverage, then you could wind up facing a late-enrollment penalty. Medicare determines this penalty by multiplying the national base beneficiary premium (which is $34.10 in 2016) by the number of full, uncovered months you didn't have Part D or PDP coverage.

But here's the catch: You'll owe this penalty every year, not just the first year you decide to enroll late. Furthermore, the national base beneficiary premium increases every year, which means your penalty probably will, too. 

2. Make too much money

I'm sure it's a problem we'd all like to have, but if you earn too much money while enrolled in Medicare, you could wind up paying premium surcharges for both Part B (outpatient services) and Part D.

Part D Surcharges
Medicare Part D surcharge table. Image source: Medicare.gov.

As you can see above, individuals and joint filers are allowed to earn up to $85,000 and $170,000 per year, respectively, (which is pretty generous) without facing an extra surcharge for being a "high-income earner." However, individuals and couples earning more than this amount while enrolled in Medicare could face monthly surcharges of between $12.70 and $72.90 per month on top of their monthly PDP premiums. 

This is one of the reasons I've dubbed the Roth IRA America's greatest retirement tool. Investment gains within a Roth are completely free of taxation as long as no unqualified withdrawals are made. This means Roth investment gains and withdrawals don't count as income, so they could help you stay below the PDP and Part B surcharge threshold while enrolled in Medicare.

3. Automatically re-enroll every year

Another easy mistake to make is to allow yourself to be automatically re-enrolled in your PDP each year. It's simple, and you don't have to lift a finger -- but it could be costing you more than you realize.

Senior Frustrated With Medical Expenses Bills Getty

Image source: Getty Images.

Prescription drug plans under original Medicare are offered by private insurers that have the liberty to tweak their coverage and premium costs each and every year. The plan that was the best value for you in 2016, and offered the most coverage for your specialty medications, may not be the best value in 2017.

Seniors who are enrolled in a PDP through Medicare need to take time each year to research which plans meet their drug coverage needs while also keeping in mind that the cheapest plan may not be the best value. The cost and coverage information on PDPs offered through Part D is usually published on Oct. 1 of each year, giving consumers two weeks of research time before open enrollment for Part D kicks off on Oct. 15. Take the time to look around, and it'll be well worth it for your health -- and the health of your pocketbook.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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