- Signing up for Medicare Part B when you are still working. If you are working for a company with 20 or more employees when you turn 65 and covered under group health insurance, you can delay enrolling in Medicare until you retire without incurring any penalties. You have the option of going on Medicare or staying on your employee health plan. As long as your group health plan is considered “creditable” (as good as what Medicare offers), you can remain on it until you either leave the company or retire.
- Not getting a Part D Drug Plan when you become eligible. Even if you are not taking any medications, I recommend my clients get a Part D Drug Plan to avoid the penalty in case you do want a drug plan at some future time. If you don’t sign up when you are eligible or have creditable coverage (through a group employee plan), a penalty will be applied to your monthly premium when you do sign up. It is 1% of the “national base beneficiary premium” multiplied by the number of months you went without having a drug plan but were eligible for one. In 2023 the base premium is $32.74, so 1 % of that would be 33 cents. If you went 12 months without drug coverage when you became eligible, the penalty would be .33 x 12 = $3.96. This amount would be added to your monthly drug plan premium for life. Some drug plans are as little as $10 a month, and even if you only use it occasionally for antibiotics, immunizations or cold remedies, it is well worth it when down the line you might develop a serious condition that merits more expensive medications.
- Thinking that Cobra is creditable coverage. If you have Cobra and become eligible for Medicare, you must sign up for Medicare. Cobra is not creditable coverage for Medicare, and you could face a penalty on your Part B premium if you don’t sign up for Medicare. You may have Cobra, however, if you were on Medicare first and had a qualifying event. In this instance, Cobra becomes your secondary insurance and Medicare is primary.
- Assuming a Supplemental Plan and an Advantage Plan are the same thing. Supplemental plans work differently with Medicare than an Advantage Plan. They have no networks, and you don’t need referrals to see a specialist. While you do have to go to providers that take Medicare, you remain in Original Medicare, and the plans are standardized and good throughout the United States. Advantage Plans have networks that you must use in order to be covered. You must live in the Service Area of the plan and usually need referrals to see a specialist. You opt out of Original Medicare, and a private insurer now administers your benefits.
- Not getting a Supplemental or Advantage Plan when you first sign up for Medicare. If you only have Medicare Parts A and B, you are leaving yourself open to a lot of out-of-pocket costs. Medicare has deductibles, copays and coinsurance, much of which can be covered through a Supplemental or Advantage Plan. Many Advantage Plans have $0 premiums, and many Supplemental Plans will cover most of the associated out-of-pocket costs of Medicare without additional copays, so it is well worth it to explore these plan options when you sign up for Medicare, as well as Part D drug plans.