Costly Medicare Mistakes: Important Considerations

July 25, 2025

Medicare can be one of the most complex parts of retirement planning, and missteps are not only common—they can be costly. From missed enrollment windows to choosing the wrong type of coverage, small errors can lead to penalties, gaps in care, and unexpected out-of-pocket expenses. The good news? With a little knowledge and planning, many of these costly mistakes can be avoided.

Below, we’ll walk through the most frequent Medicare missteps retirees make—and how you can steer clear of them.

Why Medicare Mistakes Can Be So Costly

Medicare isn’t a one-size-fits-all program. It consists of four main parts:

●     Part A (hospital insurance)

●     Part B (medical insurance)

●     Part C (Medicare Advantage)

●     Part D (prescription drug coverage)

Each part has its own rules, costs, and enrollment periods. A mistake in one area—like signing up too late or skipping drug coverage—can affect your entire health care strategy and leave you with lifelong penalties or high medical bills. That’s why understanding how Medicare works is essential as you approach retirement.

Mistake #1: Missing Your Initial Enrollment Period

Your first chance to enroll in Medicare begins three months before your 65th birthday and ends three months after. This seven-month window is your best opportunity to sign up without facing penalties.

If you wait to enroll and don’t have qualifying coverage from your job, you may get a Part B late enrollment penalty. This penalty is a 10% extra charge for each year you delay. This penalty is permanent. To avoid it, mark your calendar early and verify whether your existing health coverage is considered “creditable” under Medicare rules.

Mistake #2: Believing Medicare Is Free

While Part A is usually premium-free if you’ve paid into Medicare through payroll taxes, Parts B and D come with monthly costs. In 2025, the standard premium for Part B is around $185, and the deductible is $257. Prescription drug plans (Part D) average around $46.50 per month, depending on the plan.

Additionally, retirees with higher incomes may face IRMAA surcharges (Income-Related Monthly Adjustment Amounts) on both Part B and Part D premiums. Understanding these costs up front can help you budget more effectively.

Mistake #3: Delaying Part B Without Confirming Coverage

Some retirees delay enrolling in Part B because they’re still working or have employer-sponsored insurance. But unless your current plan meets Medicare’s “creditable coverage” standard, this delay could result in a gap in coverage and permanent penalties.

To be safe, ask your employer’s HR department if your insurance qualifies. If it doesn’t, you’ll need to sign up for Part B during your initial window to avoid penalties.

Mistake #4: Skipping Part D Drug Coverage

Even if you don’t currently take prescription medications, skipping Part D can be an expensive gamble. If you fail to enroll when first eligible and don’t have alternative drug coverage, you’ll incur a late enrollment penalty—1% of the national base premium for each month you go without coverage.

Fortunately, there are low-cost Part D plans available. Enrolling in one—even if you rarely use it—can prevent penalties and give you a safety net in case your medication needs change.

Mistake #5: Confusing Medicare Advantage and Original Medicare

Original Medicare includes Parts A and B and allows you to purchase a supplemental Medigap plan and a separate Part D policy. This setup offers flexibility in choosing doctors and is great for frequent travelers.

Medicare Advantage (Part C), on the other hand, bundles A, B, and often D into a single plan managed by private insurers. These plans can include extra perks like dental and vision, and may be more cost-effective, but typically limit you to a provider network.

Before choosing, compare how each model fits your health needs, travel habits, and budget.

Mistake #6: Not Reviewing Your Coverage Annually

Medicare plans can—and do—change every year. Drug formularies, provider networks, and premiums may shift, potentially affecting your care or increasing your costs.

That’s why it’s important to review your coverage during Medicare Open Enrollment, which runs October 15 through December 7 each year. Even if your current plan worked well last year, a better (or more affordable) option may be available.

Use the Medicare Plan Finder on Medicare.gov to compare plans in your area, or talk to a licensed Medicare broker. Many states also offer free help through SHIP (State Health Insurance Assistance Program) counselors.

Tips to Stay on Track

Avoiding Medicare mistakes starts with preparation. Here’s how you can stay ahead:

●     Mark your calendar for enrollment windows and annual reviews.

●     Check your employer coverage to ensure it meets Medicare’s standards.

●     Keep records of all Medicare-related correspondence and decisions.

●     Consider low-cost Part D plans even if you don’t take medications now.

●     Consult professionals—either a Medicare broker or SHIP advisor—for personalized advice.

Medicare decisions may seem overwhelming at first, but the cost of getting it wrong can be significant. With a little foresight and regular check-ins, you can potentially build a Medicare strategy that protects your health and your wallet well into retirement.

Sources:

https://www.thepennyhoarder.com/retirement/medicare-mistakes/

Disclosure:

This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.

This material is provided as a courtesy and for educational purposes only.

These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. Neither the named Representative nor Advisory Services Network, LLC gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.