5 Expensive Medicare Mistakes People Make (And How to Avoid Them)

Medicare is a complex system, and the rules aren't always intuitive. Most people encounter it for the first time at 65 with limited preparation. That's a recipe for costly mistakes — some of which follow you for years.

These are the five most common and financially damaging Medicare mistakes, and exactly what to do to avoid them.

Mistake 1: Missing the Initial Enrollment Period

This is the single most consequential Medicare mistake. When you first become eligible for Medicare — typically at age 65 — you have a 7-month Initial Enrollment Period (IEP): three months before your birthday month, your birthday month, and three months after.

If you don't enroll in Part B during this window and you don't have a qualifying reason to delay (like active employer coverage at a company with 20+ employees), the consequences are:

• You must wait until the General Enrollment Period (January 1 – March 31) to sign up
• Coverage won't start until July 1 of that year
• You'll owe a permanent 10% penalty on your Part B premium for every 12-month period you delayed

A 3-year delay means a 30% premium surcharge — forever. At today's $185/month standard premium, that's an extra $55.50/month, or $666/year, for the rest of your life.

The same concept applies to Part D: a 1% per month late penalty that's also permanent.

How to avoid it: Put your IEP dates on your calendar as soon as you turn 64. If you're approaching 65 with no active employer coverage, enroll in Parts A and B during the three months before your birthday month to ensure timely coverage.

Mistake 2: Not Reviewing Coverage During the Annual Enrollment Period

Medicare plans are not static. Every year, Medicare Advantage plans and Part D plans can change their:

• Monthly premiums
• Deductibles and copays
• Drug formularies (which medications are covered and at what tier)
• Provider networks (which doctors and hospitals are in-network)
• Extra benefits (dental, vision, hearing allowances)

Many people enroll in a plan that works well in year one, then do nothing the following fall — because the process of comparing plans feels tedious. The result is paying more than necessary, losing access to a preferred medication, or finding out a doctor left the network only after they need care.

The Annual Enrollment Period runs October 15 through December 7 every year. Changes take effect January 1.

How to avoid it: Every fall, pull out your Annual Notice of Change (ANOC) — the letter your plan sends in September detailing what's changing in the new year. Check whether your doctors are still in-network. Enter your medications into the Medicare Plan Finder at medicare.gov to compare your estimated costs across all available plans. Even if you stay with your current plan, this review confirms you're making an informed choice.

Mistake 3: Choosing a Plan Based Solely on the Monthly Premium

The monthly premium is the most visible number, but it's often not the most important one. A $0-premium Medicare Advantage plan can end up costing far more than a $60/month plan, depending on how much you use healthcare.

Here's why: plans with lower premiums often have higher cost-sharing — higher copays for doctor visits, higher coinsurance for specialist care, higher deductibles for hospital admissions. If you're healthy and rarely use healthcare, a low-premium plan may genuinely be a good fit. But if you have ongoing health conditions or see multiple specialists regularly, those copays add up fast.

Similarly, choosing a Part D plan based on its $10/month premium without checking whether your specific medications are on the formulary — or at what tier — can cost hundreds of dollars over the year.

How to avoid it: Calculate your estimated total annual cost, not just the monthly premium. Add up the premium, your estimated copays based on how often you typically use services, and your drug costs under each plan. The Medicare Plan Finder does much of this math for you when you enter your medications and usage patterns. Total cost, not just premium, is the number that matters.

Mistake 4: Not Checking the Provider Network Before Enrolling

With Medicare Advantage, your provider network is critically important. Most Advantage plans are HMOs or PPOs — they have networks of doctors, hospitals, and specialists. If your doctor or specialist isn't in-network, you'll pay significantly more or potentially the full cost.

People frequently discover this problem at the worst time: when they're already sick, need a specific specialist, or are mid-treatment and find their care isn't covered the way they expected.

Some common network traps:

• A hospital may be in-network but certain specialists within that hospital may not be
• A primary care doctor may be in-network, but the specialists they refer to may not be
• Networks can change year to year — a doctor in-network in 2024 may be out-of-network in 2025

How to avoid it: Before enrolling in any Medicare Advantage plan, go to the plan's online provider directory and search for your specific doctors and hospitals by name. Don't just check "is there a cardiologist near me" — check if it's your cardiologist specifically. Also verify that major hospitals and cancer centers you'd want access to are included. Call the plan's customer service line if the online directory isn't clear.

Mistake 5: Ignoring Part D Because You Don't Take Many Medications Now

This one catches people off guard years after initial enrollment. The reasoning goes: "I'm fairly healthy, I don't take prescriptions, so I'll skip Part D and save on the premium."

The problem is that Part D has a late enrollment penalty: 1% of the national average premium for every month you didn't have creditable drug coverage. And this penalty is permanent.

Skipping Part D for 5 years (60 months) means a 60% penalty added to your Part D premium — forever. If the national average premium is $36/month, that's roughly $21.60/month added permanently. Over 20 years of retirement, this adds up to over $5,000 in penalties, plus the cost of any drugs you needed to buy out of pocket during those years without coverage.

Moreover, health changes fast. Someone who takes no medications at 65 may be on multiple prescriptions by 70 following a diagnosis they couldn't have predicted.

How to avoid it: Even if you currently take no prescriptions, enroll in a low-cost Part D plan when you first become eligible. Many plans have premiums under $15–$20/month. The penalty protection alone is worth the modest cost. If you later develop a need for expensive medications, you'll be covered without penalty.

The Common Thread

All five of these mistakes share something: they're easy to avoid with a little advance planning and an annual review habit. Medicare is a significant financial benefit — most beneficiaries receive far more in coverage value than they ever paid in Medicare taxes. Treating your Medicare decisions with the same care you give your financial investments protects that benefit for decades to come.

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This is an educational website and is not affiliated with or endorsed by Medicare or any government agency. We connect consumers with licensed insurance agents who can help with Medicare enrollment. Not all plans or options are available in all areas. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all of your options.