Medicare is complicated, and Medicare mistakes can cost you money. Richard Eisenberg of Kiplinger Personal Finances helps clarify the important points that many people are unaware of.
Someone retiring at 65 can expect to spend an average of $172,500 for health care in retirement, excluding long-term-care costs, Fidelity reports. So it’s critical to understand how Medicare will help pay those bills. Yet recent studies show many people are deeply confused about key aspects of coverage — even those near the enrollment age of 65.
The majority of the 1,603 U.S. adults surveyed by the Nationwide Retirement Institute last fall, for instance, got nine out of 16 basic questions about Medicare wrong. That’s a failing grade by any measure — one with potentially serious consequences.
“If you make mistakes, you may end up with gaps in your insurance protection, large medical bills and lifetime late-enrollment penalties,” says Kimberly Lankford, a former Kiplinger columnist and author of the new book “Medicare 101.”
What to know to avoid Medicare mistakes
Here are important facts about Medicare that people often get wrong — and how to ensure you don’t pay more for health care as a result.
Enrollment rules
Fewer than 35% in the Nationwide survey answered any of its three enrollment questions correctly. Many, for instance, thought Medicare enrollment is automatic at 65, but that’s untrue.
Auto-enrollment for Part A (hospital costs) and Part B (doctor’s services, outpatient care and preventive services) only occurs for people who are receiving Social Security benefits at least four months before age 65. Otherwise, you need to sign up.
Miss the enrollment deadline (three months before you turn 65 to three months after), and you’ll often owe a stiff lifetime late-enrollment penalty for Part B — 10% for each year you were eligible but didn’t sign up. One exception: You typically won’t owe the fee if you had health coverage during this period under an employer’s plan.
Original Medicare versus Medicare Advantage
Arguably your biggest enrollment decision is whether to get coverage through original Medicare (Parts A and B) or a private insurer’s Medicare Advantage plan (Part C). Yet 35% of the Nationwide respondents, including 43% of Gen Xers, didn’t know what Medicare Advantage is.
These plans typically offer benefits that original Medicare doesn’t, such as dental, vision and hearing coverage. But unlike original Medicare, Advantage plans restrict the doctors and hospitals you can go to or charge extra for out-of-network ones. They also generally require prior authorization to see specialists, although this year, for the first time, if you have original Medicare you need prior authorization for some services in six states.
Coverage gaps
“Once people are on original Medicare, they can be surprised it doesn’t cover routine dental, vision and hearing services because they’ve had that coverage through an employer,” says Whitney Stidom, vice president of consumer enablement at eHealth. Only 31% in Nationwide’s survey knew original Medicare doesn’t cover those services.
Medicare Advantage plans often do, but with strict limits. “A lot of plans might have a $1,200 annual cap on dental expenses and a 20% to 50% co-payment,” Lankford says.
In a SingleCare poll, 31% of people mistakenly thought Medicare covers long-term care. But “Medicare does not cover long-term care for a sustainable amount of time,” says Kristi Rodriguez, leader of the Nationwide Retirement Institute.
The average 65-year-old needs $135,000 in savings for potential long-term-care costs, according to projections by the consulting firm Milliman. Alternatively, you could buy a long-term-care insurance policy.
Out-of-pocket costs
“One of the biggest misconceptions about Medicare is that everything’s free,” says Lankford. In Nationwide’s survey, 73% of respondents incorrectly said Medicare is free if you’ve worked and paid Social Security taxes for at least 10 years.
Actually, Medicare’s monthly Part B premium is a steep $202.90, up 9.7% from 2025, and can be as much as $689.90 for high-income beneficiaries subject to the IRMAA (income-related monthly adjustment amount) surcharge. Part D, Medicare Advantage and medigap plans set their own premiums.
There are also co-pays in Part A, Part B and medigap plans, as well as coinsurance (a percentage of costs owed) for Part A and medigap plans.
Part D plans have a $2,100 annual out-of-pocket limit in 2026, but only for the drugs they cover. “Some people also don’t realize how big a difference there can be in out-of-pocket costs if you go to a plan’s preferred pharmacy,” says Lankford.
Richard Eisenberg is a contributing writer at Kiplinger Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.
©2026 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.
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