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For most Americans, reaching retirement age means relying on Medicare for healthcare insurance. Research from KFF found that 67 million Americans are enrolled in Medicare – about 89% of whom are 65 or older. Based on population data, this means roughly 95% of U.S. seniors have some form of Medicare plan.
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As with private insurance, it’s important to come up with the right Medicare strategy to maximize your coverage and minimize your costs. Part of that strategy involves avoiding mistakes – and a good way to do that is to familiarize yourself with some of the changes on the horizon for 2025.
For example, beginning in January 2025 there will be a $2,000 cap on what Medicare enrollees must pay out of pocket for prescription drug costs. The new rule can help you save money — but it might also cause health insurers to increase their monthly premiums for Part D prescription drug plans.
Here are five health insurance mistakes retirees should try to avoid in 2025.
Underestimating Costs
If you’re covered under a private health insurance plan, then you know to check your premium and other costs carefully. The same holds true for Medicare, but many retirees don’t take a close enough look. Although Medicare is a government program, it’s not free or even necessarily cheap — especially if you are in a high-income bracket.
The Center for Retirement Research at Boston College (CRR) cited data on the various cost tradeoffs between choosing a Medicare Advantage policy and a Medigap policy paired with a Part D drug plan. Medigap is supplemental Medicare insurance you can buy from private insurers. In 2024, the annual out-of-pocket limit for medical care under an Advantage insurance policy is $8,850. So while Advantage plans might seem cheaper on paper, that’s not the case for everyone.
Not Checking New Medicare Premiums and Deductibles
A common mistake retirees make is not checking the new Medicare premiums and deductibles that go into effect each year. Here are the changes for 2025, according to the Centers for Medicare & Medicaid Services (CMS):
- The standard monthly premium for Medicare Part B enrollees will be $185, up from $174.70 in 2024.
- The annual deductible for all Medicare Part B beneficiaries will be $257 in 2025 vs. $240 in 2024.
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To learn more about Part A and Part B premiums and deductibles in 2025, visit this CMS website.
Not Enrolling On Time
As the CRR noted, if you enroll late for Medicare Parts A and B you’ll have a penalty tacked on to your monthly premium for the rest of your life. The later you enroll, the higher the penalty. People 65 and over are exempt from late penalties if they have health insurance from an employer with at least 20 employees. Unless you have that coverage, be sure to enroll on time if you sign up for Medicare in 2025.
Misunderstanding the Relationship Between Medicare and Private Insurance
Medicare is typically the primary insurer for retirees, according to Vision Retirement. This means that whenever you incur a healthcare expense, the bill is first submitted to Medicare. If there’s a balance left over, your secondary insurance would cover the remaining amount — if you still carry secondary insurance from a private insurer.
The mistake here is when a retiree is still part of an employer group plan that covers 20 or more employees or is part of a multi-employer group health plan. In this case, the private employer plan will act as the first payer and Medicare will kick in after that. It’s important to know who the primary payer is to better manage your health insurance.
Failing To Shop Around
It’s important to shop around for the most cost-effective Part D coverage — or an even more affordable plan in general. Take time to review options for better coverage and make sure any new plan covers prescription drugs you use. Failing to do this could result in a much higher cost than you would otherwise pay.
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