Don’t Make These 6 Medicare Plan Mistakes

This story originally appeared on NewRetirement.

No one is born understanding how Medicare works. And just because friends or family have navigated the system well doesn’t mean you won’t hit a snag.

A solid retirement plan includes a good working knowledge of what to expect from Medicare. Because the more you know now, the less likely you’ll be to encounter these common mistakes.

1. Believing that you won’t qualify

Although Medicare requires that you meet a certain number of years in the workforce, some people mistakenly believe that they didn’t work enough and that they won’t qualify for Medicare.

All that you need are 40 credits through payroll taxes. That amounts to about 10 years of work. If you meet that requirement, you won’t pay any premiums for Part A, which mainly covers hospital stays. You may also qualify for Part A based on your spouse’s earned work credits.

Further, you don’t have to meet any work requirements to qualify for Part D, which covers prescriptions, or Part B, which covers doctor visits, outpatient care, and medical equipment, says AARP’s “Ask Ms. Medicare” columnist Patricia Barry. As long as you’ve reached age 65, are an American citizen or legal resident and have lived in the state for the past five years, you qualify.

2. Enrolling at the wrong time

Although most people qualify, you still have to enroll at the right time. For example, if you wait too long to enroll in Part B — which generally covers doctors’ services, outpatient care and medical equipment — you could face a surcharge, which is added to all premiums from then on.

AARP explains that waiting to enroll can also extend your waiting period before coverage begins. Kiplinger personal finance editor Kimberly Lankford explains: “You have a seven-month window to sign up – from three months before your 65th birthday month to three months afterward.” Don’t miss your window.

Choosing the right time to enroll also means understanding the difference between the way Social Security benefits work and how Medicare works. You can delay applying for Social Security benefits until your full retirement age, which is around 66, or even longer — benefits increase with delays up to age 70.

Meanwhile, your Medicare enrollment happens at 65, and waiting isn’t a good plan for that program.

3. Thinking that Medicare covers all of your medical expenses

Medicare only covers the basics. Many retirees are very surprised to learn that there are huge out-of-pocket medical expenses in retirement.

In fact, experts estimate that the average retired couple will spend somewhere between $250,000 and $450,000 on medical expenses.

4. Not choosing a Part D plan

You might not take prescription medications now, but you never know what the future holds. Why should you enroll? “Because you don’t have a crystal ball and can’t be sure that you won’t get some unforeseen illness or injury that takes expensive drugs to treat,” says Barry.

Some people opt not to enroll in Medicare Part D, which covers prescription drug costs, and end up regretting that decision later. Enrolling as soon as possible helps you avoid unnecessary fees and the possibility of no coverage when you need it.

Like most insurance, you can’t put off signing up until you’re in a desperate situation where coverage is critical. If you still think Part D is overkill, at least choose a low-premium plan so that you aren’t on your own in case of an emergency.

AARP also cautions against choosing a Part D plan based only on what it costs or because someone you know has the same plan.

5. Missing the Medigap window

Medigap insurance covers out-of-pocket expenses that Medicare doesn’t cover. The expenses can be copays and also your deductibles. Medigap is obtained from private insurers but helps protect you from paying more at the time of service.

If you sign up for a Medigap policy, you’ll need it within six months of enrolling in Medicare Part B.

Missing the Medigap window leaves you responsible for out-of-pocket expenses, but it also does something more. If you choose a plan at the right time, you can’t be turned down. But if you miss the window, you could face higher premiums or be turned down.

Mistakes in Medicare enrollment aren’t just inconvenient. They can also be expensive. You could pay more for certain things, such as Medigap insurance, or you could face penalties that stay with you permanently.

6. Not reevaluating coverage every year

With Medicare, you need to sign up for the right supplemental policies in the beginning, but then you really should reevaluate your policy at least once a year. Your health needs will evolve and the insurance plans change often.

As such, a policy that was good for you one year might be expensive and not offer the coverage you need the next year.