Medicare

7 Medicare Mistakes That Cost Retirees Thousands — and How to Avoid Them

By Kayla Price, Licensed Medicare Agent | Price Services Group, LLC July 2026 8 min read

Medicare decisions aren't always reversible — and some mistakes come with penalties you'll pay for the rest of your life. These are the seven most common and costly errors we see.

Key Takeaways

Missing your Initial Enrollment Period can trigger permanent Part B and Part D penalties.
The lowest-premium plan isn't always the lowest total-cost plan for your specific situation.
COBRA does not count as creditable coverage — a common and expensive misunderstanding.
Reviewing your plan every year during AEP catches changes before they cost you.

Mistake 1: Missing the Initial Enrollment Period

This is the most consequential Medicare mistake, and it's entirely avoidable with planning. Missing your 7-month IEP without qualifying employer coverage triggers permanent Part B and Part D late enrollment penalties. See our complete enrollment timeline guide to make sure this doesn't happen to you.

Mistake 2: Assuming Medicare Covers Everything

Original Medicare does not cover routine dental, vision, or hearing care, and it does not cover long-term custodial care. People who assume otherwise often discover the gap at the worst possible time. Our guide on what Medicare doesn't cover walks through every major gap and how to plan around it.

Mistake 3: Choosing a Plan Based Only on Premium

A $0-premium plan can still cost you significantly more over a year than a plan with a modest premium, once copays, deductibles, and drug tier costs are factored in. Total estimated annual cost — not premium alone — is the number that matters.

Mistake 4: Not Reviewing Your Plan Every Year During AEP

Formularies, premiums, and provider networks change every single year — sometimes significantly. A plan that was your best option last year may not be this year. See our full Annual Enrollment Period guide for exactly what to check.

Mistake 5: Thinking COBRA Counts as Creditable Coverage

COBRA extends your former employer's plan, but it does not count as creditable coverage for delaying Medicare. People who stay on COBRA past 65 assuming they're covered often find out the hard way — with a permanent penalty attached. Our guide on Medicare and still working covers this distinction in detail.

Mistake 6: Enrolling in Part A While Contributing to an HSA

Enrolling in Medicare Part A — even the premium-free version most people get automatically — stops your eligibility to contribute to a Health Savings Account, and enrollment can be retroactive up to 6 months. People who don't plan around this can trigger IRS excess-contribution penalties.

Mistake 7: Waiting Until You Get Sick to Compare Plans

Outside of specific enrollment windows, switching plans — especially adding a Medigap policy — can involve medical underwriting. Comparing your options while you're healthy and have full flexibility is far safer than trying to switch after a diagnosis limits your choices.

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Frequently Asked Questions

Can Medicare penalties be waived?

Rarely, and only in specific circumstances — such as proving you received incorrect information from an employer or government source about your coverage. Standard late enrollment penalties for Part B and Part D are generally permanent once assessed.

What if I made a Medicare mistake — can I fix it?

Some mistakes are fixable during the Annual Enrollment Period or a Special Enrollment Period — like switching plans. Others, like late enrollment penalties, typically cannot be undone. The sooner you catch a mistake, the more options you usually have, so a plan review is worth doing even mid-year if something feels off.

Is there a one-time chance to switch from Medicare Advantage to Original Medicare?

The Medicare Advantage Open Enrollment Period (January 1 – March 31) lets you switch from one Medicare Advantage plan to another, or back to Original Medicare (with the option to add Part D), once per year if you're already in a Medicare Advantage plan.

What is the Medicare open enrollment period?

This term gets used loosely, but it usually refers to either the Annual Enrollment Period (October 15 – December 7, open to everyone) or the Medicare Advantage Open Enrollment Period (January 1 – March 31, only for people already in a Medicare Advantage plan). See our full Annual Enrollment Period guide for the difference.

How do I know if my drug plan is still the best option next year?

Review your plan's Annual Notice of Change (ANOC), mailed every September, and compare your specific medications against next year's formulary and tiers — the lowest-premium plan isn't always the lowest-cost plan once your actual prescriptions are factored in.

Informational purposes only This content is for educational purposes only and does not constitute legal, financial, or medical advice. Enrollment rules and penalty calculations are set by CMS and are subject to change. Consult a licensed Medicare advisor for guidance specific to your situation.

Price Services Group is an independent licensed insurance agency — not affiliated with or endorsed by the U.S. government, the Social Security Administration, or the federal Medicare program. NPN: 18530055. Agency NPN: 20387435.

Sources
Medicare.gov — Avoid Late Enrollment Penalties
Centers for Medicare & Medicaid Services (cms.gov)