The 3 common Medicare mistakes that retirees make

Millions of older Americans get their health coverage through Medicare. And whether you're first gearing up to enroll or have been on Medicare for years, it's important to know how to make the most of those benefits.

Unfortunately, not everyone is well-versed in how Medicare works. And that could lead to confusion and some poor choices. With that in mind, here are a few big Medicare mistakes you should make every effort to avoid.

1. Signing up late

A late Medicare enrollment won't necessarily just mean delayed coverage. It could mean paying more for Medicare Part B for life.

Your initial window to sign up for Medicare is seven months long. It starts 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'll be able to enroll down the line. But at that point, you risk a lifelong surcharge for Part B -- specifically, a 10% penalty per 12-month period you were eligible to enroll in Medicare but didn't.

Now you may be wondering what the rules look like when you already have access to a health plan when your initial Medicare enrollment window arrives. The answer is that if you're part of a qualifying group health of 20 employees or more, you'll generally be entitled to a special Medicare enrollment period once that group coverage ends. So in that situation, you can delay your Medicare enrollment without getting hit with a penalty.

But remember, not every health plan gives you this option. If you work for a small business with 12 employees on its health insurance plan, then you'll face the aforementioned surcharges with a late Medicare enrollment.

2. Overlooking the drawbacks of a Medicare Advantage plan

When it comes to Medicare coverage, you have options. You could stick with original Medicare, which is Parts A and B plus a Part D drug plan. Or, you could sign up for all-in-one coverage under Medicare Advantage.

There are certain benefits to choosing Medicare Advantage over original Medicare. An Advantage plan might offer supplemental benefits beyond what original Medicare covers, and it might even cost you less.

But there's a big drawback to choosing Medicare Advantage, and it's that you'll typically be limited to a specific network of providers. That could make it difficult to access the care you need or find doctors that are conveniently located to where you live.

With original Medicare, you can pretty much see any doctor in the country who accepts Medicare. That gives you more choices overall. And it could also make it easier to travel domestically without having to worry about what to do if you need to follow up on a medical issue.

3. Not reviewing coverage options during open enrollment

Each year, Medicare runs an open enrollment period that begins on Oct. 15 and wraps up on Dec. 7. During this time, current enrollees can make changes to their coverage, whether it's switching from one Part D plan to another, changing Advantage plans, or moving from Medicare Advantage to original Medicare.

If you're reasonably happy with your existing coverage, you may decide to sit open enrollment out. But that could be a huge mistake.

You never know when there might be a more affordable plan you're eligible for. Or, there may be a plan with comparable costs whose benefits are far superior. So it always pays to explore your coverage options in the fall, even if you don't end up making an actual change.

It's important to educate yourself on how Medicare works so you can make the most of the program and keep your healthcare costs in retirement manageable. And while you're doing that, keep these mistakes in mind so you can hopefully avoid them.

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