How to Avoid Medicare Mistakes That Could Cost You Thousands

Medicare has a lot of moving parts, and it’s easy to miss deadlines or choose the wrong plan. This is especially true if you’re still adjusting to retirement and new financial priorities. That said, many of the most common Medicare mistakes are entirely avoidable with some research and planning.

Here are some of the biggest Medicare mistakes retirees make, and how you can avoid repeating them.

Why Medicare Mistakes Are So Expensive

Medicare mistakes are so expensive because they could affect your coverage and leave you financially vulnerable. 

Medicare is made up of four parts: A, B, C and D. Each plays a role in your coverage. Because these four parts work together in specific ways, a mistake in one area can affect your health care in retirement. 

For example, enrolling late in Part B can result in expensive penalties that you pay for the rest of your life. Choosing the wrong plan can leave you with unexpected out-of-pocket costs.

So, as you approach retirement age, take some time to learn how the system works and the mistakes to avoid. 

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1. Missing Your Initial Enrollment Window

Your first chance to enroll in Medicare lasts for seven months. It starts three months before the month you turn 65 (including your birthday month) and ends three months after. If you don’t sign up during this enrollment window and you’re not covered by a qualifying employer plan, you’ll likely face delays and added costs. 

One of the most expensive consequences is the Part B late enrollment penalty. You’ll pay an extra 10% for each year you could have signed up for Part B, but didn’t. You may also have to pay a higher premium depending on your income.

Make sure you remember this to avoid getting caught off guard once you retire. And if you’re thinking about delaying Medicare, double-check whether your current insurance qualifies as “creditable coverage,” which allows you to sign up for Part B later without penalty. 

2. Assuming Medicare Is Free

Medicare isn’t entirely free. Even though you usually don’t have to pay for Part A (inpatient coverage) if you’ve worked and paid Medicare taxes, Parts B and D come with monthly costs.

The standard monthly premium for Part B in 2025 is about $185. The annual deductible (the amount you must pay out of pocket before the insurance starts to pay) is $257. 

Prescription drug coverage under Part D isn’t free either. The premium amount varies by plan, but the average is estimated to be $46.50 in 2025, according to the National Council on Aging.

If your income is above a certain level, you may also have to pay an extra charge called IRMAA (Income-Related Monthly Adjustment Amount), which can bump up the price of both Part B and Part D.

3. Delaying Part B When You Shouldn’t

Some people delay signing up for Part B because they still have health insurance through work. However, this would only make financial sense if your employer coverage qualifies as “creditable.”

Creditable coverage means your current insurance is at least as good as Medicare in terms of benefits and cost. For Part B, this typically applies to group health plans from a current employer with 20 or more employees. 

If your employer coverage doesn’t qualify, you could end up with a gap in coverage and face the same lifelong penalty mentioned earlier. So, always check with your benefits administrator to see if your current plan is Medicare-compliant. If it isn’t, you’ll need to sign up for Part B during your initial enrollment period. 

4. Skipping Prescription Drug Coverage (Part D)

Even if you’re not taking any medications, you’ll want to consider signing up for Part D coverage. This is because if you don’t enroll when you’re first eligible and you don’t have other creditable drug coverage, you’ll have to pay a penalty that lasts as long as you have Medicare. The penalty is calculated as 1% of the national base premium for every month you go without coverage. 

“Having a Part D plan in place could cost anywhere from no cost or a low monthly fee,” said Natasha McPherson, CLTC, managing director at Hall Wealth Management and owner of McPherson Insurance. “In the long run, it pays you to have one in place. No one should enroll in Medicare without one.”

5. Not Understanding Medicare Advantage vs. Original Medicare

Medicare Advantage (Part C) is a solid alternative to original Medicare, but it’s not for everyone. Before choosing this health insurance plan, make sure you understand how it differs from Original Medicare. 

Original Medicare includes Part A and Part B and can be paired with a Medigap (supplemental) policy to help cover out-of-pocket costs. You can also add Part D for drug coverage. This setup usually offers more flexibility when it comes to seeing specialists or getting care while traveling. 

“That said, Medigap plans typically do not cover prescriptions, dental or vision, and can have premiums in the range of $200 to $300 per month,” said Whitney Stidom, vice president of medicare enablement at eHealth Insurance. However, Medicare Supplement plans don’t have a network of doctors, so they’re great for people who travel a lot and want maximum flexibility in their care.

Medicare Advantage plans are privately managed insurance plans that include Medicare Parts A, B, and most often, Part D. They may also come with extra coverage, such as dental or vision. These plans usually have provider networks, meaning you’ll need to stay in-network for most services. “However, Medicare Advantage plans can be more affordable than Original Medicare, and they often offer extra benefits at a fraction of the cost of paying for Medicare Supplement and a stand-alone Part D drug plan,” Stidom said. 

6. Not Reviewing Coverage Annually

Medicare isn’t something you set and forget. “Rules change every year. Once you enroll in Medicare, you’ll want to review new plans annually and contact your agent to see if there are any updates they think you should be aware of,” McPherson said. “What the insurance companies don’t tell you is that they come out with better versions of your current plan every year at lower prices.” 

Beyond price changes, plans could also drop your doctor or stop covering a medication you take. That’s why you should review your options each year, even if you’re happy with your current plan.

Use Medicare.gov’s Plan Finder tool to compare plans in your area. Many states also offer free counseling through the State Health Insurance Assistance Program (SHIP), which can help you understand your options.

Tips to Avoid Costly Medicare Mistakes

Here are a few steps you can take to avoid common and costly Medicare mistakes:

• Set calendar reminders for your initial enrollment window and Open Enrollment each fall
• Contact your employer’s HR department to check whether your health coverage is creditable
• Keep all Medicare-related documents in one place to stay organized 
• Consider enrolling in low-cost Part D coverage, even if you don’t need medications now
• Talk to a licensed Medicare broker for personalized plan recommendations
• Use SHIP counselors for free guidance based on your state and situation
• Review your coverage every year to make sure it still fits your needs

Jamela Adam is a personal finance writer covering topics such as savings, investing, mortgages, student loans and more. Her work has appeared in Forbes Advisor, Chime, U.S. News & World Report, RateGenius and GOBankingRates, among other publications.