How much does health care cost when you're retired? A 2024 report found that an average 65-year-old couple in good health can expect to spend up to $395,00 over the course of their retirement.¹ With that kind of price tag, you don't want to throw money away paying for more health care coverage than you actually need.

Below are six costly mistakes Boomers make when enrolling in Medicare—and steps you can take to avoid them.

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 types of coverage.

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. It may also cover 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 your 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. But choosing a Medicare plan is too important to leave to guesswork. Take the time to review your health insurance needs before the first—and subsequent—enrollment periods.

Here are four questions to consider when assessing your coverage needs:

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.

NCOA offers a free online tool where you can leanr more about benefits programs that can help you stay health, including the Medicare Savings Programs (MSPs) and Extra Help. Find out how you can get help paying for food, utilities, housing, and more—so you can age better and worry less.

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.

Here are five things to consider when evalutating your coverage:

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 you think through your Medicare coverage options and compare plans—such as your local State Health Insurance Assistance Program (SHIP). SHIPs offer free, 100% unbiased insurance counseling and assistance to Medicare-eligible older adults. Visit the SHIP website to find one near you.

Source

1. 2024 Milliman Retiree Health Cost Index. May 14, 2024. Found on the internet at https://www.milliman.com/en/insight/retiree-health-cost-index-2024