As Americans approach retirement age, many wrongly assume Medicare will cover all their healthcare needs—but that’s sometimes not the case.
In fact, choosing the wrong Medicare plan can be costly. Researchers found that older adults overspend by an average of $368 per year, with more than 20% paying $500 more than necessary—an issue that can be avoided in future years by doing an annual review.
That’s because Medicare—the federal health insurance program for seniors and some younger individuals with disabilities—isn't a one-size-fits-all solution. It's a complex system of options designed to meet diverse health and financial needs.
“Navigating the Medicare process can be stressful and confusing,” said Jim Shaw, director of BOK Financial Advisors. “Having the wrong plan, one that doesn’t cover your doctor or specific medical needs, can be financially devastating to families. We encourage our clients to review their plan annually to avoid such issues.”
You can review your plan at any time; however, if you need to switch plans, Medicare’s annual open enrollment period runs from October 15 to December 7, allowing beneficiaries to switch their coverage for the following year.
What to consider during a Medicare plan review
The first step is confirming you have the right coverage. Under the Medicare system, there are several coverage options, including Original Medicare (Parts A and B), Medicare Advantage (Part C), Medicare Part D and Medigap. The costs associated with these plans can vary widely—by hundreds or even thousands of dollars annually. Even with the correct Medicare coverage, the average couple retiring at age 65 could expect to spend about $300,000 in healthcare costs over the span of their retirement, according to the National Council on Aging.
Consider these factors as you review if your current plan is right for you:
- Health changes: Have you experienced new diagnoses or injuries?
- Doctor network: Are your doctors still in-network, and would it matter if you need to switch plans?
- Prescription coverage: Will your current prescriptions be covered under next year’s plan?
- Additional benefits: Do you need dental, hearing or vision coverage?
- Travel coverage: Does your plan cover medical expenses while traveling?
- Affordability: Is your plan still manageable within your budget, or are higher deductibles and copays straining your finances?
Experts advise evaluating both your current health and potential future needs. As you age, the likelihood of new medical issues increases. Opting for a plan with higher premiums but lower out-of-pocket costs might save you money over time.
Finding the right guidance
Reviewing your Medicare plan—and any related notices—before open enrollment is crucial, but assistance is available year-round. If the Medicare process feels overwhelming, consider reaching out to experts. Licensed Medicare advisors who meet the National Council on Aging's standards can provide valuable support.
Here are some trusted annual review resources:
- State Health Insurance Assistance Programs (SHIPs): These programs offer free, unbiased counseling in every U.S. state and territory. Find your local SHIP office or call 877-839-2675.
- Your financial advisor: Advisors at institutions like BOK Financial Advisors can help assess how Medicare fits into your overall financial strategy.
- Medicare support hotline: Available 24/7 at 1-800-MEDICARE (800-633-4227) or visit Medicare.gov for live chat support.
Be cautious with private insurance companies, especially those offering Medicare Advantage, Part D and Medigap plans, Shaw warns. Some may use misleading marketing tactics, particularly during open enrollment. “Your Medicare review should be no-cost and free from pressure and sales pitches,” he said. “It’s a red flag if someone reviewing your plan tries to sell you something.”
What to know if you’re still working or delaying enrollment
Even if you’re working past age 65 and plan to use your employer’s insurance, it’s important to enroll in Medicare three to six months before turning 65. Missing the enrollment window for certain supplements can lead to penalties or higher prices.
“A review of your Medicare eligibility and coverage options remains essential, even if you’re covered by an employer plan, or do not plan to use Medicare for a while, to avoid unexpected costs down the road,” Shaw said.
Staying informed and proactive about your Medicare options can make a significant difference in managing your healthcare costs and ensuring you receive the care you need. By annually reviewing your plan and seeking expert advice, you can navigate the complexities of Medicare with confidence and peace of mind.
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