Most Seniors Are Making This Medicare Mistake

Male doctor talking to patient
Photo by sebra / Shutterstock.com

As the leaves begin to fall and the nights grow longer, seniors across America have the chance to tweak their Medicare coverage into something that suits them better. But relatively few do so.

In fact, less than half of beneficiaries — 43% — say they review or compare Medicare coverage options annually, according to an analysis of data from the Kaiser Family Foundation (KFF).

The time to make such comparisons is now. Medicare open enrollment runs from Oct. 15 to Dec. 7.

There are two main types of Medicare: traditional Medicare, the government-managed program also called Original Medicare, and Medicare Advantage plans, which are all-in-one alternatives offered by private insurers.

During the fall open enrollment period, seniors with traditional Medicare have the chance to add a Medicare Part D stand-alone drug plan to their coverage, or change their existing Part D plan. Or, they can switch from traditional Medicare to a Medicare Advantage plan.

Seniors who have Medicare Advantage can change their existing Medicare Advantage plan during open enrollment. Or, they can switch from Medicare Advantage to traditional Medicare.

Both Medicare Advantage and Part D plans vary in cost and coverage, as these types of plans are offered by private insurance companies that contract with the federal Medicare program. As KFF states:

“Plans often change from one year to the next, which could lead to unexpected and avoidable costs for beneficiaries who do not review their options annually. Plan changes can also lead to disruptions for beneficiaries in Medicare Advantage plans, if their doctors do not remain in their plan’s network from one year to the next, or if their drug plan no longer covers one of their medications, or makes a change in their pharmacy network, or increases costs for covered drugs.”

Just a small percentage of Medicare beneficiaries switch plans each year, according to KFF. That might be because recipients are satisfied with their coverage. Or, it could mean seniors are missing out on more affordable or more appropriate coverage — or both — because they don’t shop around.

Getting the right Medicare coverage

As we have noted before, Medicare can be confusing. That’s especially true if you are new to the federal health insurance program reserved for seniors and people with certain disabilities.

For example, if you miss your first enrollment period, it can be costly:

“Generally, you become eligible for Medicare when you turn 65. But failing to enroll on time can trigger permanent financial penalties — we’ll get to those shortly — or delay benefits.”

For more, check out “4 Pitfalls for First-Time Medicare Enrollees.”

People who have used Medicare for years can make costly mistakes too. For more on the pitfalls to avoid, read “Don’t Make These 6 Medicare Plan Mistakes.”

Finally, if you are not yet eligible for Medicare, but plan to be one day — either soon or in the distant future — don’t assume that the government plan will cover all your retirement health costs. It will not.

That means you need to save money now for your health care needs later.

If you are eligible for one, opening a health savings account is a great way to pile up tax-advantaged savings that you can use to pay for health needs during retirement. Money Talks News contributor Miranda Marquit has a health savings account with Lively, and she loves it. For more on her experience, read “3 Ways a Health Savings Account Can Improve Your Finances.”

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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