Millions of older Americans today get health coverage via Medicare. And if you're nearing the age of 65, you may be starting to think about enrollment.
But as you might expect, there are different rules associated with Medicare that could be tricky to keep track of. As a result, you might end up accidentally making a costly mistake when it comes to enrolling or managing your expenses. So with that in mind, here are three Medicare blunders you should really do your best to avoid this year.
1. Not signing up on time
You can begin to receive coverage through Medicare once you turn 65. However, you don't have to wait until your 65th birthday to sign up.
You get seven months to enroll in Medicare initially. That window begins three months before the month of your 65th birthday, and it ends three months after that month.
You don't automatically have to sign up for Medicare during that period if that doesn't make sense for you. If you have health coverage through a job, for example, because you're still working, then why pay for Medicare when you have an employer plan you're happy with?
If you're a participant in a qualifying group plan (which generally means covering 20 enrollees or more) then you won't automatically face a surcharge for a late Medicare enrollment. But if that's not the case, then you should know that signing up for Medicare after your initial enrollment window could subject you to lifelong penalties. So if you don't have qualifying health coverage in place, make sure to sign up for Medicare when you're supposed to.
2. Forgetting that you can sign up for Part A alone
If you have health coverage already, you may decide to put off your Medicare enrollment. And that makes sense.
But one thing you should remember is that Medicare Part A, which covers hospital care, is generally free for enrollees. And if you sign up, Medicare can serve as secondary insurance should you require a hospital stay. That might spare you from having to cover certain expenses your primary insurer won't pay for.
Now that said, if you're an HSA participant, you'll need to stop funding that account once you enroll in Medicare. And if you want to continue contributing to an HSA, that's reason enough not to sign up for Medicare Part A alone. But if you don't have an HSA and you do have group health coverage, there's really little reason not to take advantage of Part A once you're eligible.
3. Not reading up on your costs
The last thing you want to do is skimp on health coverage because you can't afford it, so it's really important to do some research to learn about the costs you might face as a Medicare enrollee -- and save and prepare for them accordingly.
For example, Medicare Part B itself, which covers outpatient care, costs $174.70 a month this year. That's the standard monthly premium, but higher earners do pay more. On top of that, there's a $240 annual deductible Medicare Part B beneficiaries have to meet.
Part A, meanwhile, does not generally charge a premium, as mentioned earlier. However, there are costs associated with a hospital stay as a Medicare enrollee.
This year, you'll be subject to a $1,632 deductible per hospital stay, and that sum covers your first 60 days as a hospital patient. From there, there's a daily coinsurance rate you'll pay that depends on the number of days you remain admitted.
Make sure you're aware of these and other Medicare costs. And if you're currently funding an HSA, consider ramping up your contributions if you're not maxing out before you move over to Medicare so you have more money to access for healthcare expenses.
Avoiding the above mistakes generally boils down to taking the time to read up on Medicare. Doing so could save a world of financial stress in the coming year, so it pays to make that effort.