Key Takeaways

  • Health care is one of the biggest expenses that you will need to plan for in retirement.

  • Recent estimates indicate that the average couple retiring today can expect to spend close to $300,000 on health care in retirement. 

  • Within Medicare, you have quite a bit of options to choose from, and the cost of these options can vary by hundreds, and in some cases, thousands of dollars per year. 

Your Medicare plan can help you pay for the health care that you need, but you also don’t want to throw away money paying for more insurance than you actually need. There are six key mistakes boomers make when enrolling in Medicare—but they are all avoidable if you follow these steps.

Mistake 1: Signing up too early or too late for Medicare and its parts

When aging into Medicare, the Initial Enrollment Period is based on your 65th birthday. To avoid long-term penalties, understand what decisions have to be made and in what timeframe. If you or your spouse are working when you turn 65 and your insurance meets certain requirements, it may make sense to delay enrollment in Parts A, B, and D.

Learn about Enrollment Periods

Mistake 2: Not understanding the difference between a Medicare Supplement (Medigap) and a Medicare Advantage (Part C) policy

Those new to Medicare have a fundamental choice to make – enroll in Original Medicare or opt into a Medicare Advantage plan. It is very important to understand the pros and cons of both coverages.

Original Medicare (also known as Parts A & B) is a fee-for-service program. Most people supplement this government benefit with a private Medicare Supplement (also called Medigap) policy and a Part D plan for their prescription drugs.

A Medicare Supplement policy may cover some services that are not included under the standard Medicare Parts A and B as well as some out-of-pocket costs such as:

  1. Co-insurance costs for care at skilled nursing facilities
  2. The Part A deductible
  3. Foreign travel emergency care

Medicare Supplement policies have additional monthly premiums. Prior authorization to use specialists or get second opinions is not required.

A Medicare Advantage Plan (Part C), takes the place of Original Medicare Parts A and B. These plans work more like group insurance. They are sold through approved, licensed insurance companies and may have an additional monthly premium. Medicare Advantage plans include prescription drug coverage as well as services Original Medicare does not cover like dental and vision care. A Medicare Advantage plan may also limit your ability to use doctors and hospitals and require prior authorization to use specialty services.

If needs change, switching to a new plan is allowed during the Medicare Open Enrollment Period (OEP).

Compare Medicare Advantage vs. Medigap

Mistake 3: Guessing when picking specific plans

It can be very difficult and time-consuming to compare all of the plans that are available. Choosing a Medicare plan is too important to leave to guesswork. Take the time to review health insurance needs before the first — and subsequent — enrollment periods.

Four questions to consider:

  1. Do you have health insurance from another source?
  2. Do you have any chronic conditions?
  3. Which doctors and hospitals do you use?
  4. Which prescriptions do you need, and what pharmacies do you get them from?

Learn about Medicare Coverage 

Mistake 4: Not applying for financial assistance

Millions of older adults are eligible for billions of dollars in programs that can help them pay for their prescriptions and health insurance premiums, deductibles, and coinsurance. If your income in retirement is modest, find out if you qualify for assistance. We provide a free online assessment that helps determine eligibility and assist with applying online for Extra Help or Medicare Savings Programs. Or contact the State Health Insurance Assistance Program (SHIP) to see what’s available.

Learn about Extra Help 

Mistake 5: Not re-evaluating coverage annually

Choosing health insurance is no longer a one-time decision for most Medicare beneficiaries. Insurance companies can make changes to policies every year. Just because some doctors and medications are covered this year does not ensure coverage in the coming year. Research studies show that the average consumer could save $300 or more annually by reviewing their Part D coverage. Make sure to confirm cost, copays, coinsurance, covered providers, and prescription drugs.

Five things to consider:

  1. Has your health changed in the last year?
  2. Is your current plan still meeting all your health needs?
  3. How much have you paid out-of-pocket in the last year—and for what?
  4. How is your plan changing for the coming year? How will that affect your out-of-pocket costs?
  5. Are there better options available to you now?

Learn about Open Enrollment

Mistake 6: Not asking for help

Get help from a trusted source that can help think through options and compare plans. If unsure about choices, start with our assessment to get a personalized report with options that can start a conversation with a licensed benefits advisor.

Take Our Medicare Questionnaire