Avoid These 10 Mistakes When Choosing Your Medicare Advantage Plan

Choosing a Medicare plan can seem complicated. With so many options, it’s easy to get a little confused when facing an enrollment decision. Being aware of common Medicare mistakes can help you avoid penalties, remember important enrollment periods, and take advantage of benefits that might save you money.

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Medicare Mistakes

Newly eligible Medicare beneficiaries may be surprised to learn all the decisions involved in choosing a plan that gives you the coverage you need at a price you can afford. Everyone’s needs are different, and since Medicare is individual insurance, it can seem overwhelming to narrow down your options. Balancing the pros and cons of each option and projecting your healthcare needs is part of the process to avoid Medicare sign-up mistakes.

TIP: Check out our chart on the different parts of Medicare explained. 

Medicare Advantage

Medicare Advantage (MA) is an option for people who want Part A and Part B benefits under one comprehensive plan. Most MA plans include additional benefits for little to no extra cost. MA is a popular choice, and over 26 million Medicare recipients were enrolled in 2021, according to Kaiser Family Foundation (KFF).

After you enroll in Medicare Part A and Part B, you can:

• Add Part D, the Medicare coverage for prescription drugs
• Purchase a Medicare Supplement (Medigap) plan
• Enroll in Medicare Advantage, which may include Part D

If you decide to enroll in a Medicare Advantage plan, you may have more than one to choose from. Since 2011, the number of MA plans has been trending upward with more available in 2022 than in previous years. Access to one or more MA plans will vary with your location.

TIP: Discover 7 reasons to switch your Medicare Advantage plan.

Costly Medicare Advantage Mistakes You Can’t Afford

Before you choose to enroll in an MA plan, review the following 10 costly Medicare Advantage mistakes you can’t afford to make.

1. Ignoring your plan’s Annual Notice of Change

In the last quarter of each calendar year, your MA plan will send you an Annual Notice of Change for the following calendar year. The notice includes any changes, such as coverage and costs, which will go into effect on January 1. Read the document so you don’t miss this opportunity to evaluate if your current plan will still meet your needs.

2. Automatically renewing your Medicare Advantage plan without reviewing it

Even if the plan has not changed, it’s a good idea to review your medical needs and expenses from the past year. You may have switched doctors or had a change in your health status. You may have required more or different medications that have resulted in higher out-of-pocket costs.

All of these factors would warrant a review of your current plan to see if it will continue to work for you next year. Comparing your current coverage to other plans available in your area may introduce you to other options.

3. Selecting a plan based solely on premiums

Medicare Advantage plans that include prescription drug coverage are known as MA-PDs. The KFF reports that in 2022, more than nine out of 10 beneficiaries (98%) have access to an MA-PD with a $0 monthly premium. It is tempting to rush into a plan that does not add a premium on top of the Part B premium which you still have to pay. But be sure you are prepared for copayments and coinsurance required throughout the year.

4. Picking the same plan as your partner, spouse, or friend

One of the most common Medicare mistakes is choosing the same plan as your spouse or following a friend’s advice without doing your own research. It may seem like the easiest approach, but there are variables to consider such as medications, health conditions and budget.

You also may not share the same interest in the extended benefits that some MA plans offer. For example, gym membership benefits may be a priority for you while your partner favors a plan with better vision coverage.

5. Overlooking the maximum out-of-pocket limit

If you are in good health, it may seem like the out-of-pocket maximum feature is insignificant. But, you could quickly reach the cap if you develop a chronic health condition like diabetes. The deductible, copayments, coinsurance and drug costs add up, and the financial stress on top of health issues can put a family into crisis.

6. Disregarding late enrollment penalties

A prerequisite of joining an MA plan is having Original Medicare Part A and Part B. You can only register for Part A (if not premium-free) and Part B during your Initial Enrollment Period and, under some circumstances, during a Special Enrollment Period. Not understanding late enrollment penalties is a costly Medicare mistake because the penalties can be steep:

• Part A (if you have to buy it): up to a 10% increase in monthly premium for double the number of years you failed to enroll
• Part B: up to 10% for each 12-month period that you failed to enroll, which may be imposed for as long as you are enrolled in Part B
• Part D: The late enrollment penalty depends on how long you went without Part D (and didn’t have creditable prescription drug coverage); Medicare calculates the penalty by multiplying 1% of the “national base beneficiary premium” ($33.37 in 2022) times the number of full, uncovered months you didn’t have Part D or creditable coverage. The monthly premium is rounded to the nearest $.10 and added to your monthly Part D premium.

7. Choosing a plan that doesn’t include your healthcare providers

If the MA plan you choose has a provider network, you may have to use only participating doctors to receive the highest level of benefits or, in some cases, any coverage at all. For example, a Health Maintenance Organization (HMO) generally requires that you use the plan’s network, except in specific situations like emergencies or out-of-area temporary dialysis. Review the plan’s provider directory to confirm if the doctors you want to use will accept the plan you want.

8. Not knowing the different types of Medicare Advantage plans

There are several different types of MA plans. For example, if you have certain kinds of medical conditions, or if your income is limited, you may be eligible for a Special Needs Plan (SNP), tailored to accommodate specific health requirements. Research all the MA plans available in your area to identify the one most suitable for you.

9. Choosing a plan that doesn’t cover all your prescription drugs

Joining a plan that does not cover your medications is a costly misstep because some drugs are cost-prohibitive. Drug coverage under Part A and Part B is limited. Before you enroll in an MA plan, check the plan’s formulary to verify your medications are listed.

10. Missing out on the Open Enrollment Period if you need to make changes

If you made Medicare sign-up mistakes during your initial enrollment, remember the dates of enrollment periods when you are allowed to make changes. The Medicare Open Enrollment Period runs from October 15 to December 7.

During this time, you can join, change or drop an Medicare Advantage (MA) plan or Prescription Drug Plan (PDP). You can also drop your MA plan and revert back to Original Medicare, and enroll in a stand-alone PDP at that time.

Medicare Advantage Open Enrollment runs from January 1 to March 31. If you are already enrolled in an MA plan, you can change to a different MA plan or revert back to Original Medicare and join a Medicare Prescription Drug Plan during MA OEP.

Why is Medicare so Confusing?

Since its inception in 1965, Medicare has evolved with added parts and expanding eligibility. The program began with Part A and Part B. It was expanded to cover people with disabilities, other health conditions and financial constraints.

Changes in 2003 led to the introduction of Part D and Medicare Advantage plans. As a result, Medicare may seem fragmented and confusing. Guidance from your plan provider can add clarity to the process and help you avoid these common Medicare mistakes.

TIP: Use our Medicare plan finder to compare plans side-by-side.