Medicare covers a lot of health problems—and causes a lot of headaches. The complex program features four parts…10 supplemental coverage options…hundreds of drug plans…and a virtually endless list of rules. Figuring it all out is a daunting challenge, and missteps can have massive consequences—certain errors can never be completely corrected and will affect your Medicare costs and/ or coverage for the rest of your life. Here are big mistakes to avoid…

Mistake: Enrolling at the wrong time. When should you first sign up for Medicare? The short answer is that you become eligible at age 65—there’s a seven-month “initial enrollment period” that includes the month of your 65th birthday plus the three months before and the three months after.

The longer answer is…complicated. It might make sense for you to delay enrolling in certain parts of Medicare beyond age 65 if you’re covered by an employer’s group health insurance plan. But it depends on the size of the employer.

If the employer providing your coverage (your employer or your spouse’s) has 20 or more employees, you can delay signing up for Medicare, thus delaying the start of monthly Medicare premiums. Since your employer’s plan likely already includes outpatient and drug benefits, you could choose to delay Parts B and D, which cover similar items.

If the employer has fewer than 20 employees, it’s crucial that you sign up for Medicare during your initial enrollment period. A small employer’s group plan is a “secondary payer” for Medicare-eligible participants, meaning that it covers only the portion of medical bills that the group plan covers but Medicare does not. If you don’t sign up for Medicare, you could be stuck with out-of-pocket costs until the next general enrollment period. Example: If a small employer’s group plan covers $850 of a $1,000 medical expense while Medicare ordinarily covers $800 of that expense, the group plan may pay only $50 of the expense for a Medicare-eligible employee. If that employee hasn’t enrolled in Medicare, the remaining $950 would have to be paid out of pocket.

Signing up for Medicare any later than the initial enrollment period could trigger higher premiums, too. Example: The premiums for Part B, which covers outpatient medical services, are permanently increased by 10% for each 12-month delay in enrollment. Those higher premiums don’t apply if you’re covered by a large employer’s group plan, however—as long as you sign up for Medicare during an eight-month “special enrollment period” that begins the month after your access to an employer and/or group plan ends.

More details worth noting…

It’s usually worth enrolling in Medicare Part A, which covers hospital expenses, at age 65 even if you are covered by a large employer group plan. Part A has no premiums for the majority of Medicare participants, so enrolling usually has little downside. Exception: It could be worth postponing Part A if you are satisfied with the hospital coverage provided by your group plan and you wish to contribute to a Health Savings Account (HSA). Enrolling in any part of Medicare, including Part A, makes you ineligible to contribute to an HSA.

It’s not always obvious whether a company has 20 or more employees. You can’t just count heads—part-time or seasonal employees could complicate the math. Ask your HR rep, “Is our group coverage primary or secondary to Medicare?”

Don’t delay signing up for Medicare because you have retiree or COBRA coverage from a large employer. Unlike “active employee” coverage from an employer, these coverage types are secondary to Medicare and don’t trigger a special enrollment period when they end.

Mistake: Misunderstanding the Medicare/Social Security connection. These government programs are linked in some ways but unrelated in others, and this partial overlap can cause confusion. One key connection: If you start receiving Social Security benefits prior to age 65, possibly because of early retirement or working part-time, you will be automatically enrolled in Medicare Parts A and B when you turn 65, and your Medicare premiums will be deducted from your Social Security checks or direct deposits. But just because you’ve been automatically enrolled doesn’t mean that there aren’t ways you can and should take charge of your Medicare enrollment decisions. Three scenarios…

Scenario #1: You are receiving Social Security benefits when you turn 65 but have large-employer group coverage and don’t wish to be enrolled in Medicare Part B. Watch your mail for a Medicare welcome package, which should arrive about three months before your 65th birthday. You can delay your coverage by contacting the Social Security Administration (SSA) office as soon as possible.

Scenario #2: The SSA automatically enrolls you in Medicare at age 65, and that is what you want. There’s a catch: You will be automatically enrolled in only Medicare Parts A and B. It’s still up to you to select and enroll in a Medicare Part D plan, which covers prescription medications, and to decide whether you wish to enroll in a Medicare Advantage plan rather than “Original” Medicare…or a Medigap plan in addition to Original Medicare.

Scenario #3: You want to enroll in Medicare but don’t want to start Social Security benefits yet. You’ll have to pay Medicare premiums out of pocket rather than have them deducted from your Social Security checks/direct deposits. Social Security will send you a quarterly or monthly invoice, or you may set up automatic payment from a bank account to ensure that you don’t miss a Medicare payment—a missed payment could get you disenrolled from Medicare…and if that happens, it might not be possible to rejoin until the middle of the following year.

Mistake: Believing “free” Medicare Advantage Plans are truly free Medicare. Medicare Advantage plans are alternatives to “original Medicare” offered by private companies. Marketing materials for these plans often emphasize that they charge no or very low monthly premiums… but frequently fail to clarify what that means exactly. While the Medicare Advantage plan itself might have $0 premiums, enrollees still are required to pay the Medicare Part B premium, which in 2021 was typically $148.50 per person per month. Some Medicare Advantage plans cover part or all of this Part B premium for enrollees, but many do not. So read the fine print carefully or work with a Medicare insurance broker who can walk you through the details of the plan.

Worse, people who sign up for these “free” Medicare Advantage plans sometimes fail to pay Medicare bills because they assume these bills no longer apply… and end up disenrolled from Medicare.

Mistake: Signing up for the Part D plan that your spouse or friend has. In most areas, there are so many Part D prescription drug plans available that many Medicare enrollees grow frustrated trying to choose among them and simply sign up for the plan that a spouse or friend uses…the plan that has the lowest premiums…or a plan offered by a company they trust. Unfortunately, those all are bad ways to pick a Part D plan.

In fact, there’s really only one good way to select a Part D plan—use the plan-finder tool at to identify the plans that offer the lowest out-of-pocket costs for the prescriptions you take regularly. That probably isn’t going to be the plan your spouse has because your spouse almost certainly takes different prescription drugs than you.

Some people worry, What if I start taking an expensive drug in the middle of the year? If that happens, contact the plan provider and ask how you can submit a request for an exception—Part D plan providers often agree to provide some coverage when otherwise uncovered drugs are prescribed midyear.

Revisit each year during Medicare’s annual October 15 through December 7 open-enrollment period to sort through the available Part D plans again—the best one for you could change frequently.

Mistake: Paying an avoidable premium surcharge. The Medicare Part B monthly premium is $148.50 in 2021… but not for everyone (2022 premiums will be announced in October 2021). If your Modified Adjusted Gross Income is over $88,000 (over $176,000 if married filing jointly), you’ll also be charged an “Income Related Monthly Adjustment,” which could push that premium up to as much as $504.90 per month…more than $1,000 per month for a married couple. Your Part D premiums would be increased as well, climbing by $12.30 to $77.10 per month. People who are hit with these higher rates usually assume that they have no choice but to pay up— but there sometimes is another option.

The SSA determines whether to charge you these inflated Medicare premiums based on your income from two years earlier. You can appeal the surcharge if your current income is lower than it was two years ago, though only if your income declined because of one of the SSA’s approved “life changing events”—work stoppage…work reduction…marriage… divorce/annulment…death of a spouse… loss of pension income…employer settlement payment…or loss of income-producing property. If so, file Form SSA-44, Medicare Income-Related Monthly Adjustment Amount—Life-Changing Event… you could save hundreds of dollars per month in Medicare premiums.

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