3 Costly Medicare Errors New Retirees Often Make

Healthcare is probably one of the biggest expenses you'll face in retirement. It may even be your single largest ongoing cost, especially if you pay off your home before ending your career.

It's important to do what you can to keep your healthcare spending to a manageable level. And part of that means avoiding these potentially huge Medicare mistakes.

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1. Missing the initial enrollment period

Your initial Medicare enrollment window spans seven months. It starts three months before the month you turn 65 and ends three months after that month.

All told, that's a pretty long window. But if you miss it, you put yourself at risk for late enrollment penalties that could stick with you for life.

Specifically, you'll be hit with a 10% surcharge on your Medicare Part B premiums for each year-long period you don't have coverage upon becoming eligible. And going too long with prescription coverage could lead to penalties on your Part D premiums as well.

Now if you're still working at the time of your initial enrollment period, and you have qualifying health coverage through your job, you'll generally qualify for a special enrollment period. That allows you to sign up for Medicare at a later date without incurring late enrollment penalties.

But make sure your group health plan qualifies for a special enrollment period before delaying Medicare. Otherwise, you could end up paying more on a permanent basis.

2. Choosing a drug plan based on premiums alone

When you decide to stick to original Medicare, as opposed to Medicare Advantage, you need to buy a separate Part D plan to cover prescriptions. But one thing you don't want to do is choose a Part D plan based on premium costs alone.

It's important to review each Part D plan's formulary to see how it classifies the medications you take. A plan with lower or even $0 premiums could leave you paying a lot more for your actual prescriptions, leading to higher costs overall.

3. Sitting out fall open enrollment

Medicare Advantage and Part D drug plans can change every year. These plans can add or take away benefits, and the costs related to your coverage can rise or fall.

That's why it's so important to actively participate in Medicare's fall open enrollment period every year. Even if you're happy with the plan you have, there may be a better plan that costs you less money and/or offers access to benefits you don't currently have.

Fall open enrollment runs each year from Oct. 15 to Dec. 7. Mark those dates on your calendar so you don't miss an important opportunity.

The Medicare decisions you make could have a major impact on your retirement budget. Aim to avoid these mistakes so you don't end up spending more money on healthcare than you have to.

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