Millions of older Americans receive health coverage through Medicare. And while the program is far from perfect, it does commonly serve as a lifeline for retirees who might otherwise struggle to afford health insurance.
But if you want to make the most of Medicare, you'll need to fully understand its ins and outs. And you'll also want to avoid these fairly common mistakes.
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1. Signing up late
Seniors are eligible for Medicare at age 65. However, you don't have to wait until your exact 65th birthday to sign up.
Rather, your initial enrollment window begins three months before the month you turn 65 and ends three months after the month of your 65th birthday. So all told, you get seven months to sign up.
If you miss that initial enrollment period, you can still sign up for Medicare later on. But you should know that for every 12-month period you fail to sign up for Medicare upon being eligible, you'll face a 10% surcharge on your Part B premiums -- for life. So if you want to avoid that permanent financial hit, make a note of when your initial enrollment window is.
You should also know that there are exceptions to that penalty, such as if you're covered by a qualifying workplace health insurance plan during your initial enrollment window. But you'll need to make sure you're eligible for an exception to avoid lifelong Part B premium surcharges.
2. Not signing up for Part A while continuing to receive workplace coverage
If you're enrolled in a qualifying health insurance plan through your job, or through a spouse's job, then you don't have to sign up for Medicare during your initial enrollment window. And you may decide not to sign up for Medicare specifically because your workplace plan is affordable and comprehensive.
But one thing you should know is that Medicare Part A, which covers hospital care, is generally free for enrollees. So even if you have a workplace plan to fall back on, you may want to sign up for Part A only so it can serve as secondary insurance for you in the event of a hospital stay. Part A might pick up certain costs that your primary insurance plan doesn't.
That said, once you enroll in any part of Medicare, you're barred from making contributions to an HSA. So if that's something you're in the habit of doing, then signing up for Part A alone may not be desirable despite it being free.
3. Not reviewing coverage choices during open enrollment
Each year, Medicare enrollees get an opportunity to make changes to their coverage during open enrollment, which takes place between Oct. 15 and Dec. 7. Medicare enrollees can switch from one Part D drug plan to another or swap an existing Medicare Advantage plan for a new one. They can also move onto Medicare Advantage for the first time or dump Advantage and go back to original Medicare (Parts A and B) plus a Part D drug plan.
If you're happy with your Medicare plan, you may decide to just sit out open enrollment. But in doing so, you might forgo the chance to get onto a plan that's more affordable for you. So it definitely pays to spend some time reviewing your choices for coverage and comparing your current plan to the alternatives that are available.
Medicare is an important program, and it's one you should aim to benefit from as much as possible. Avoiding these mistakes could be your ticket to doing just that.
