American retirees keep making these 5 costly Medicare mistakes — how to avoid them and keep your nest egg healthy in 2025

US seniors keep making these 5 Medicare mistakes

Turning 65 in the U.S. means finally being able to rely on Medicare covering most of your health expenses. But before you join the 67 million Americans enrolled in Medicare, it’s important to understand what’s covered and what’s not.

Navigating the rules around Medicare can feel overwhelming — especially when mistakes can end up costing you dearly. You could easily overlook important deadlines and end up with gaps in your coverage, higher out-of-pocket costs, or even miss out on advantageous tax breaks.

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And when you’re living on a fixed income, the last thing you want to do is leave money on the table. Here are five costly Medicare mistakes and how to avoid them.

Failing to sign up on time

Forgetting to enroll for Medicare coverage could mean you’ll need to pay a penalty, limit your coverage options, or even have to wait until the next enrollment period.

If you’re already receiving Social Security benefits for at least four months when you turn 65, you’ll automatically be enrolled for Medicare Part A — but you will need to sign up for Part B and other coverage yourself. Otherwise, you’ll need to enroll for your plan during the initial enrollment period — just like you did when you were shopping for health insurance on the Marketplace.

However, you should still have another chance during the general enrollment period to sign up. The late penalty could be as high as 10% of your monthly premium, depending on which plan you failed to sign up for.

Medicare does, however, also offer a special enrollment period if you’re still covered under a qualifying employer health care plan or within eight months after the coverage ends.

Choosing coverage without research

Not looking over whether your current doctor and preferred providers are covered under the plan you choose could end up costing you thousands of dollars in out-of-pocket costs. The same goes with not understanding what medications are covered in your original Medicare and Part D plan.

Before signing up for a plan, ask to see the plan’s current formulary, which is a list of the medications a plan covers. And be sure to confirm if your doctor and providers are covered under a potential plan.

Or, if you’ve already signed up for a plan, call ahead and confirm what’s in the network, such as the surgeon and other specialists like radiologists.

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Not comparing Medicare and Medicare Advantage plans

Medicare and Medicare Advantage plans are different, and not understanding the difference means you could be overpaying for a plan, filled with features you don’t need. Choosing the wrong plan could lead to higher out-of-pocket medical costs.

Medicare plans are offered by the government and designed for those aged 65 or older or qualifying individuals with certain disabilities. Private health insurance companies offer Medicare Advantage plans for those age 65 and up.

Choosing Medicare Advantage plans could offer more benefits like dental plans, but plan participants may not be able to use their current doctor or medical providers. And while more providers may accept Medicare plans, you could still pay more out-of-pocket depending on the care you need.

Seeking the help of a trusted professional to understand your needs and which plan is best will help you save money.

Overlooking how your income impacts premiums

If you still work and your modified adjusted gross income is $106,000 (or $212,000 if you’re married) in 2025, you will pay more than the standard $185 for Medicare Plan B — the exact amount will depend on your income. You could also pay a surcharge for Plan D.

Check beforehand if you think you’ll be at or near this income amount. If so, consider making moves like limiting your retirement distributions. You can appeal to lower the surcharge you pay if you experience a life-changing event like a divorce or loss income.

Automatically renewing the same policy

Your Medicare or Medicare Advantage plan is set to automatically renew each year. This feature can be useful as it ensures you have coverage each year.

However, if the benefits have changed — like the list of medications covered in Part D — then not paying attention could mean bigger costs out of pocket. This is especially true if you have a chronic condition that requires multiple prescriptions.

Set yourself a reminder before the general enrollment period opens and schedule some time to review plans. Compare how much each plan could cost in terms of copays, coinsurance fees and deductibles. Don’t forget to look at any potential out-of-pocket costs you may face.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.