Key Takeaways
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Small enrollment mistakes in Medicare can lead to costly premium penalties and unexpected healthcare expenses.
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Understanding your enrollment deadlines and options helps avoid unnecessary costs and coverage gaps.
The Hidden Costs of Enrollment Mistakes You Can’t Afford to Ignore
Signing up for Medicare might seem straightforward, but small missteps can lead to higher premiums, unexpected medical bills, and long-term financial headaches. Whether you’re approaching eligibility or already enrolled, avoiding these common mistakes can save you money and stress down the road. Here’s what you need to watch out for to keep your healthcare costs under control in 2025 and beyond.
1. Delaying Enrollment Past Your Initial Eligibility Window
One of the biggest mistakes you can make is missing your Initial Enrollment Period (IEP). Your IEP lasts for seven months, starting three months before your 65th birthday, including your birth month, and continuing for three months afterward. If you fail to enroll in Medicare during this window and don’t have qualifying coverage, you could face permanent premium penalties.
Medicare Part B Late Enrollment Penalty
If you don’t sign up for Part B when first eligible and don’t have creditable coverage from an employer with at least 20 employees, you’ll pay a 10% penalty for each full 12-month period you went without coverage. This penalty never goes away and adds up over time, making your healthcare significantly more expensive.
Additionally, if you delay too long and miss both your IEP and Special Enrollment Period (SEP), you will have to wait until the General Enrollment Period (GEP), which runs from January 1 to March 31 each year. Your coverage won’t begin until July 1, meaning you could be without essential medical benefits for several months.
Medicare Part D Late Enrollment Penalty
Medicare Part D (prescription drug coverage) also has a penalty if you go 63 or more consecutive days without creditable prescription drug coverage. The penalty is calculated as 1% of the national base premium per uncovered month and never goes away as long as you have Part D.
What You Should Do
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Mark your IEP on your calendar and enroll as soon as possible.
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If you have employer coverage, confirm whether it is creditable and ask your benefits administrator for documentation.
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If you miss your IEP, enroll during the General Enrollment Period (GEP) from January 1 to March 31, but expect penalties and delayed coverage.
2. Assuming Employer Coverage Means You Can Skip Medicare
If you’re still working at 65 or beyond, you might think your employer’s health plan means you don’t need Medicare yet. However, the rules vary depending on the size of your employer, and making the wrong assumption can result in gaps in coverage and costly penalties.
When You Must Sign Up for Medicare
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If your employer has fewer than 20 employees, Medicare becomes your primary insurance at 65, and you must enroll in Part B to avoid losing coverage.
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If your employer has 20 or more employees, you may delay Part B without penalty as long as you have creditable employer coverage.
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If you retire or lose employer coverage, you get a Special Enrollment Period (SEP) of eight months to sign up for Part B without penalties.
Common Pitfalls
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COBRA and retiree coverage don’t count as active employer coverage for delaying Medicare enrollment.
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If you miss your SEP, you’ll have to wait until the next General Enrollment Period, and coverage won’t start until July 1—leaving you uninsured in the meantime.
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Some employer plans require you to enroll in Medicare at 65 or become the secondary payer, meaning you could face large out-of-pocket costs if you don’t enroll in Part B.
What You Should Do
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Check with your HR or benefits department to confirm whether your employer coverage is creditable.
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If retiring, enroll in Part B before your employer coverage ends to avoid gaps in coverage.
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Don’t assume that COBRA or retiree health plans allow you to delay Medicare without penalties.
3. Not Understanding the Income-Related Monthly Adjustment Amount (IRMAA)
Many retirees don’t realize that their Medicare Part B and Part D premiums can be higher based on their modified adjusted gross income (MAGI) from two years prior. If your income exceeds certain thresholds, you’ll pay an additional charge known as IRMAA (Income-Related Monthly Adjustment Amount).
2025 IRMAA Brackets
For individuals earning over $106,000 and couples earning over $212,000, monthly Medicare premiums increase significantly. This surcharge applies to both Part B and Part D and can double or even triple your standard premium costs.
How to Reduce Your IRMAA
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Appeal IRMAA if your income has dropped due to retirement, divorce, or other life changes.
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Consider Roth conversions before enrolling in Medicare to lower your taxable income.
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Manage withdrawals from tax-deferred accounts like 401(k)s and traditional IRAs to avoid pushing your income above IRMAA thresholds.
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Use Qualified Charitable Distributions (QCDs) to donate to charity while keeping your taxable income lower.
What You Should Do
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Check your latest IRS tax return to see if you’ll be subject to IRMAA in 2025.
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If your income has changed, file Form SSA-44 with Social Security to request a reduction in IRMAA.
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Plan withdrawals from retirement accounts strategically to keep your MAGI below IRMAA thresholds.
Avoid These Mistakes and Save on Medicare Costs
Medicare enrollment isn’t something you can afford to take lightly—especially when missing a deadline or making an incorrect assumption can result in lifetime penalties and unnecessary expenses. Whether you’re approaching Medicare eligibility or already enrolled, taking the time to understand the rules will help you avoid premium surcharges, coverage gaps, and unexpected healthcare costs.
If you have questions about Medicare enrollment, a licensed agent listed on this website can help you navigate your options and ensure you’re making the best decisions for your healthcare and finances.
