Top 10 Things People Get Wrong About Medicare

Going on Medicare is a big decision. Don't mess it up. Here are the top ten things people tend to get wrong about Medicare. As always, working with a licensed, local, independent agent is the best way to avoid costly mistakes. Contact me anytime with questions.

1. Everyone Must Start Medicare at 65 Even if Only Part A

Wrong. If you're in any of the following five circumstances, you should definitely enroll in Medicare at age 65:

1. You get your healthcare through an ACA (aka, Obamacare) plan from the healthcare.gov health insurance exchange. Can you keep an ACA plan after turning 65? Technically, yes. But you lose any advance premium tax credits you may be getting, meaning that you will pay full tilt for whatever plan you're on. You can do much better cost-wise on Medicare and have first-dollar coverage (no or minimal deductible on most Medicare plans). Remember, ACA was designed as a last resort health insurance solution for those who cannot get coverage any other way, for example, through an employer or through Medicare.

2. You are on an employee retirement plan. These are plans offered by employers for those who have retired from working life before the age of 65. Once you turn 65, most of these plans pay second to Medicare. So, if you have not enrolled in Medicare, you become the first payer, something you don't want to be. Check with your HR department for the specifics of any employee retirement plan in which you may be enrolled.

3. You are on COBRA. Even if your employer may be paying for your COBRA, staying on COBRA once you turn 65 is a bad choice. First, COBRA pays second to Medicare. So, if you have not enrolled in Medicare, you become the first payer, something you don't want to be. Second, and worse, COBRA is not considered creditable coverage by Medicare, so when you finally do enroll in Medicare, you will be subject to a Part B late enrollment penalty that you will pay for the rest of your life on Medicare.

4. You are on Tricare for life. While you're on Tricare under age 65, Tricare pays first. But once you turn 65, Tricare for life pays second to Medicare. So, if you have not enrolled in Medicare, you become the first payer, something you don't want to be.

5. You are still working and covered by employer group health, but you are working for an employer that has 19 employees or fewer. In this case, your employer group health pays second to Medicare. So, if you have not enrolled in Medicare, you become the first payer, something you don't want to be.

In all of the above cases, you should start talking to me three months before the month in which you will turn 65.

If you are working past the age of 65, covered by employer group health, and your employer has 20 or more employees, you DO NOT have to enroll in Medicare. Employer group health plans offered by employers with 20 or more employees are considered "creditable coverage" by Medicare, meaning, they offer coverage that is equal to or better than Medicare. This means you can continue on these plans and not switch to Medicare health coverage if it doesn't make sense to do so. Whether it makes sense to keep employer group health or switch to Medicare is a purely financial decision and I can help you compare your options to see if Medicare is a better deal for you. If you continue with employer group health, you will have a special enrollment period (SEP) available to you when you decide to leave employer group health that will let you enroll in Medicare after age 65 without a late enrollment penalty. And one more reason not to enroll in Medicare in this situation: if you are taking advantage of a health savings account (HSA) offered by your employer, you can no longer contribute to the HSA once you enroll in Medicare Part A. If you are working past 65 and on employer group health as described here, you should start talking to me three months before your employer group health plan will terminate.

2. If You Don't Take Medicare Part A at 65 You Will Be Penalized

Wrong, for around 99% of the Medicare population. Part A late enrollment penalties (LEP) are levied only against those who do not have the required 40 quarters (ten years) of FICA (Federal Insurance Contributions Act) payments into the system and therefore have to pay a Part A premium. Only in that case is there the possibility of a Part A LEP. Again, only around 1% of the Medicare population pays a premium for Part A coverage.

3. If You're Taking Social Security You Must Start Medicare at 65

Wrong. What is true: If you are enrolled in Social Security before age 65, you will automatically be enrolled in Medicare Parts A & B. In the three months preceding your birth month, you will receive a Medicare card in the mail showing both a Part A and Part B effective date. And you will have to remain enrolled in Part A. However, you do not have to remain enrolled in Part B. If, for example, as explained in item #1 above, you have an employer group plan that you're happy with and is considered creditable by Medicare, you can decline Part B and continue with your employer plan. In the mailer containing your Medicare card, you will find instructions on how to decline and delay Part B (CMS Form 1763). In the future when your employer group plan terminates, you will have a Special Election Period (SEP) for a delayed Part B enrollment allowing you to activate Part B on your timetable penalty free.

4. If You're Turning 65 You Must Stop HSA Contributions 6 Months in Advance

Wrong, assuming you're continuing creditable employer group health and you have not enrolled in Part A or Part B. HSAs (Health Savings Accounts) are great way to pay for qualifying medical expenses with pre-tax dollars. Once you enroll in Medicare Part A or B at age 65, you can no longer contribute to an HSA. But you can contribute right up the last month before your Part A/B effective date. Where the 6-month lookback rule comes into play is if you're applying for Part A/B after you turn 65. The scenario would be that you did not enroll in Medicare at 65 because you had a creditable employer group health plan that you remained on after turning 65 and are still contributing to an HSA. Then you decide to leave employer group health for Medicare. When you apply for Medicare, you will be able to specify when you want your Part B effective date to be. But you cannot specify when you want your Part A effective date to be. Medicare will back date your Part A to six months before your application month or to your turning 65 month if that occurs less than six months before your application date. With that knowledge, if this case applies to you, you can determine up to which month you can continue to contribute to an HSA. Remember, you can no longer contribute to an HSA after your Part A or Part B effective date. The funds in the HSA remain available to you to pay qualifying medical expenses, but no additional contributions can be made.

5. Medicare is Free

Wrong. Most (99% of the Medicare population) do not pay a premium for Part A. This is considered an entitlement for having paid FICA into the system for 40 quarters (10 years). (We don't say "free" because you've been paying for it most of your working life.) But, with few exceptions, everyone pays a monthly Part B premium to Medicare. Most pay the base rate for the current year. (In 2026, the base rate is $202.90/month.) Roughly 8% of Medicare beneficiaries additionally pay IRMAA (Income Related Monthly Adjustment Amount), an upcharge to those in higher income brackets. Additional expenses when on Medicare include the following:

• If enrolled in a Medicare Advantage plan (Part C), many of which have no additional monthly premium associated with them, you will have co-pays for various medical tests and procedures. You will also have co-pays for certain drugs covered by the Part D drug coverage included in most Medicare Advantage plans.

• If enrolled in Original Medicare with a Medicare supplement plan (MediGap) you will have the monthly premium associated with the Medicare supplement. Depending on the plan, you may have to pay an annual Part B deductible and possibly co-pays to see some doctors, etc.

• If enrolled in a standalone Part D prescription drug plan (PDP), you may have a monthly premium for the PDP and also co-pays for certain drugs covered by the plan.

6. When Turning 65 You Will Be Enrolled into Medicare Automatically

Wrong, unless you're already enrolled in Social Security. As discussed in #3 above, if you are enrolled in Social Security before age 65, you will automatically be enrolled in Medicare Parts A & B and receive a Medicare card in the mail sometime in the three months preceding your birth month. Otherwise, you must self-enroll in Medicare. To do this online, you must have an account at ssa.gov. From there, you can self-enroll in Medicare. You can also do this in person by making an appointment at the local Social Security office or over phone by calling Social Security.

7. If You're Retiring at 65+ and Your Employer Provides COBRA You Can Delay Medicare

Wrong. And an expensive mistake. COBRA is not considered creditable coverage by Medicare and is always in the second payer position to Medicare after age 65. If you don't enroll in Medicare Parts A & B, then you end up in the first payer position, somewhere you don't want to be. For more about how this kind of mistake affects your late enrollment penalties, see my article When to Say No to COBRA (even if it's FREE)

8. If You Take No Meds or Inexpensive Generics You Don't Need a Part D Drug Plan

Wrong. And it can be an expensive mistake. And it can lead to penalties if you enroll late. You don't buy insurance for what's in the rearview mirror. You buy insurance for what may come in the future. There is no way to know what drugs you may be prescribed in the future. And, while GoodRX/SingleCare coupons or costplusdrugs.com may be working for you now, those options won't protect you from the high cost of some prescription drugs. But a Part D drug plan (either standalone or part of a Medicare Advantage) will absolutely cap your calendar year drug costs at $2,100 out of pocket in plan year 2026 for in-formulary drugs. And you can't add a drug plan anytime you want, only during the annual enrollment period October 15 thru December 7 for a January 1 effective date.

9. You Can Buy a Medicare Supplement (MediGap) Plan Anytime You Want

Wrong. Here are the only situations in which you can apply for a MediGap plan and be certain that it will be issued to you:

• MediGap Open Enrollment Period (OEP): This period starts on the first day of the month of your Part B effective date and lasts six months. During this period, carriers must sell you a Medicare Supplement plan without medical underwriting, meaning they can't ask you any health questions or deny you for preexisting conditions.

• Guaranteed Issue Rights: In some situations, you may have a guaranteed issue right if there is not a break in creditable coverage of more than 63 days. Guaranteed issue simply means that, like in MediGap OEP, the carriers must sell you a MediGap plan without medical underwriting. Some of these guaranteed issue situations include: when you are covered by a Medicare Advantage plan and move to a new area; when you lose an employer-sponsored retiree plan due to plan termination; when you exercise your Medicare Advantage plan trial right; when your Medicare Advantage plan is withdrawn from your area or the carrier leaves the market.

• Outside of the above scenarios, carriers will sell you a Medicare Supplement plan only if you can pass medical underwriting. To pass medical underwriting you must be able to answer "no" to a dozen or more medical questions about medical diagnoses and your prescription drug record must show that you are not being treated for any of the conditions asked about.

10. I Can Start with a No-Premium Medicare Advantage Plan While I'm Healthy and Switch Later to Original Medicare with a MediGap Plan if I Get Sick

Wrong. It's true that you may have a Medicare Advantage plan trial right that will allow you to do this without medical underwriting for the MediGap plan, but that's only in certain circumstances and only lasts for 12 months. After the trial right expires, you will not be able to get a MediGap plan unless you can pass medical underwriting. There are two periods during the year that you can leave a Medicare Advantage plan for Original Medicare: 1) the annual election period (AEP), October 15 thru December 7 for a January 1 effective date; 2) the Medicare Advantage open enrollment period (MA OEP), January 1 thru March 31. So, yes, you can return to Original Medicare easily enough, but you may not be able to buy a MediGap plan depending on our current health. And if you're switching to Original Medicare because you've already been diagnosed and want better treatment options, then it's unlikely you will pass medical underwriting for the MediGap plan. Bottom line: you may be on Medicare Advantage for the rest of your life.

Concluding Thoughts

The best way to avoid common Medicare mistakes? Talk to a licensed, local, independent agent, like me! Contact me here to discuss your Medicare questions. I look forward to hearing from you.