# 7 Medicare Mistakes That Can Cost You Thousands (and How to Avoid Them in 2027)

- Link: https://fantasyfrontierfun.com/medicare-mistakes-to-avoid/
- Published: 2026-10-28T02:32:36+00:00
- Author: The Health Advocate Editorial Team

**Independent guide.** The Health Advocate is not affiliated with Medicare, CMS 
or any insurer. This is general information, not insurance or tax advice. Updated
October 2026.

![Older couple looking over Medicare paperwork at a table](https://fantasyfrontierfun.
com/wp-content/uploads/2026/10/worried-senior-couple-documents.jpg)

Medicare traps

Most Medicare mistakes don’t cost you once. They cost you every month.

Seven common slip-ups, what each one can cost, and the simple step that prevents
it.

**Key takeaways**

✔ The Part B late penalty is 10% for every full 12 months you could have had Part
B but didn’t, and it usually lasts as long as you have Part B.

✔ Skipping drug coverage triggers a separate Part D penalty that also usually lasts
for life.

✔ A $0-premium Medicare Advantage plan can still leave you owing up to $9,850 for
in-network care in 2027.

✔ Your best chance to buy a Medigap policy without health questions is a one-time,
6-month window.

Medicare has a reputation for being complicated, and it earns it. The rules themselves
aren’t hard once you see them laid out, but they come with deadlines that don’t 
move and penalties that don’t go away. A mistake at 65 can still be showing up on
your premium bill at 85.

Here are the seven mistakes that cost people the most, roughly in the order they
tend to happen, with a plain-English explanation of each and what to do instead.

## Mistakes at a glance

| Mistake | What it can cost | How to avoid it | 
| Missing Part B enrollment | 10% higher Part B premium per year late, usually for life | Enroll in your 7-month window or confirm you have qualifying job coverage | 
| Going without drug coverage | A Part D penalty added to your premium, usually for life | Join a Part D plan or keep creditable drug coverage | 
| Not reviewing your plan each fall | Higher drug costs, lost doctors | Read the Annual Notice of Change and compare by December 7 | 
| Choosing by premium alone | Up to $9,850 in-network out-of-pocket in 2027 | Compare total yearly cost, not just the premium | 
| Missing the Medigap window | Higher premiums or a denied application later | Buy within 6 months of enrolling in Part B at 65+ | 
| Contributing to an HSA after enrolling | Tax penalty on excess contributions | Stop contributions about 6 months before you enroll | 
| Not applying for help | Paying full price when you didn’t have to | Check Medicare Savings Programs and Extra Help |

## 1. Missing your Part B enrollment window

Your Initial Enrollment Period is seven months long: the three months before the
month you turn 65, your birthday month, and the three months after. If you’re already
collecting Social Security, you’re usually enrolled in Parts A and B automatically.
If you’re not, you have to sign up yourself through Social Security.

If you don’t sign up for Part B when you’re first eligible, and you don’t have health
coverage from your own or your spouse’s _current_ job, you’ll generally pay a late
enrollment penalty: 10% of the standard Part B premium for every full 12-month period
you went without it. In most cases you pay that penalty for as long as you have 
Part B.

**What that looks like:** the standard Part B premium is $202.90 a month in 2026.
Someone who waited two full years would pay a 20% penalty, about $40.60 extra a 
month, or roughly $487 a year. Because the penalty is a percentage, it rises every
time the standard premium does. CMS usually announces the 2027 Part B premium in
mid-November; the Medicare Trustees projected about $209.50.

**How to avoid it:** mark your 65th birthday month on a calendar and count back 
three months. If you plan to delay Part B because you’re still working, confirm 
with your employer’s benefits office that your coverage qualifies (more on that 
in our [turning-65 checklist](https://fantasyfrontierfun.com/turning-65-medicare-checklist/)).

![Pin on a wall calendar marking a deadline](https://fantasyfrontierfun.com/wp-content/
uploads/2026/10/drawing-pin-on-calendar.jpg)

## 2. Going without drug coverage

Part D, Medicare’s prescription drug coverage, has its own penalty. If you go 63
days or more in a row without Part D or other _creditable_ drug coverage (coverage
at least as good as Medicare’s) after your enrollment window ends, you’ll usually
owe a late enrollment penalty when you do join.

The penalty is 1% of the national base beneficiary premium for each full month you
went without coverage. That base premium is $41.33 in 2027. Go 24 months without
coverage and you’d add about 24% of $41.33, roughly $9.90 a month, to whatever your
plan charges, for as long as you have Part D.

**How to avoid it:** even if you take few or no medications, a low-premium Part 
D plan protects you from the penalty and from a sudden expensive prescription later.
If you have drug coverage through work or a union, your plan must tell you each 
year whether it’s creditable. Keep that letter.

![Older patient talking with a pharmacist at a pharmacy counter](https://fantasyfrontierfun.
com/wp-content/uploads/2026/09/img_6aba5ba795426.jpg)

## 3. Letting your plan renew without a look

If you have a Medicare Advantage or Part D plan and do nothing during open enrollment,
you usually stay in the same plan. The problem is that the plan itself changes every
January 1. Premiums, deductibles, the list of covered drugs (the formulary), drug
tiers and provider networks can all shift.

Your plan must send an Annual Notice of Change by September 30. It’s the single 
most useful document you’ll get all year, and the one most people throw away. For
2027 in particular there’s a lot moving: the Part D out-of-pocket cap rises to $
2,400, the maximum Part D deductible rises to $700, and a federal program that held
down some drug plan premiums in 2026 has ended.

**How to avoid it:** read the notice, then use the Plan Finder at Medicare.gov with
your actual drug list. Open enrollment runs October 15 to December 7. Our [2027 open enrollment guide](https://fantasyfrontierfun.com/medicare-open-enrollment-2027-changes/)
walks through what to check.

## 4. Choosing a plan by the premium alone

Many Medicare Advantage plans charge a $0 premium. That can be a genuinely good 
deal, but $0 isn’t the same as free. You still pay your Part B premium, and you 
pay copays, coinsurance and deductibles when you use care.

Every Medicare Advantage plan has a yearly cap on in-network out-of-pocket costs.
For 2027, CMS allows that cap to be as high as $9,850, up from $9,250 in 2026. Plans
can set a lower cap, and many do, but a plan with a $0 premium and a high cap can
cost far more in a year with a hospital stay than a plan with a modest premium and
a low cap.

Original Medicare works differently: it has no yearly out-of-pocket limit at all,
which is why many people on Original Medicare add a Medigap policy.

**How to avoid it:** estimate your total yearly cost in two scenarios, a quiet year
and a bad year. Add premiums, the deductible, likely copays and the out-of-pocket
maximum. The cheapest plan in a quiet year isn’t always the cheapest when you need
care.

## 5. Missing your Medigap open enrollment window

If you choose Original Medicare, a Medicare Supplement (Medigap) policy can pick
up much of what Medicare leaves behind, such as the 20% coinsurance on most Part
B services. You get a one-time, 6-month Medigap open enrollment period that starts
the first month you’re both 65 or older and enrolled in Part B.

During that window, an insurer can’t refuse to sell you any Medigap policy it offers
or charge you more because of your health. After it ends, in most states insurers
can ask health questions and turn you down. A few states give extra protections,
so check with your State Health Insurance Assistance Program (SHIP).

This matters most for people who start with Medicare Advantage and later want to
switch to Original Medicare. You can switch back during open enrollment, but you
may not be able to buy a Medigap policy at that point.

**How to avoid it:** decide between Original Medicare plus Medigap and Medicare 
Advantage _before_ your window closes, knowing the switch later may not be as easy.

## 6. Contributing to an HSA after you enroll

Once you’re enrolled in any part of Medicare, including premium-free Part A, you
can no longer contribute to a Health Savings Account. The catch: if you sign up 
for Part A after 65, your Part A coverage can be backdated up to six months (but
not before the month you turned 65). Contributions made during those backdated months
count as excess contributions, which can trigger a tax penalty.

**How to avoid it:** if you’re working past 65 and delaying Medicare, stop HSA contributions
about six months before you plan to enroll. You can keep spending money that’s already
in the account on qualified medical expenses, including Medicare premiums (but not
Medigap premiums), tax-free.

## 7. Not applying for help with costs

Several programs lower Medicare costs for people with limited income and savings,
and many eligible people never apply:

 * **Medicare Savings Programs**, run by state Medicaid offices, can pay your Part
   B premium and, at the lowest income levels, your deductibles and coinsurance.
 * **Extra Help** (also called the Low-Income Subsidy) lowers Part D premiums and
   drug costs. You can apply through Social Security.
 * **Medicaid** can cover costs Medicare doesn’t, including long-term care for people
   who qualify.

**How to avoid it:** income and asset limits vary by program and state, and some
states count less than you’d expect. If money is tight, ask your SHIP counselor 
or state Medicaid office to check. It costs nothing to apply.

## A bonus mistake: assuming Medicare covers long-term care

Medicare doesn’t pay for assisted living or for ongoing help with daily activities
like bathing and dressing. Families often find this out in a crisis. Read [what Medicare does and doesn’t cover for long-term care](https://fantasyfrontierfun.com/does-medicare-pay-for-assisted-living/)
before you need it.

**Your quick checklist**

 1. Know your 7-month Initial Enrollment Period dates.
 2. If delaying Part B, get written confirmation your job coverage qualifies.
 3. Have Part D or creditable drug coverage from day one.
 4. Read your Annual Notice of Change every fall.
 5. Compare plans by total yearly cost, not premium.
 6. Decide on Medigap within your 6-month window.
 7. Stop HSA contributions about 6 months before enrolling.
 8. Check whether you qualify for help with costs.

## Quick answers

### Can a Medicare late enrollment penalty be removed?

Sometimes. If you believe the penalty is wrong, for example because you had qualifying
job coverage, you can ask for a reconsideration. For Part B, contact Social Security.
For Part D, your plan’s penalty letter explains how to request a review.

### Does the Part B penalty ever go away?

Usually not. In most cases it lasts as long as you have Part B. One exception: people
who qualified for Medicare under 65 because of a disability lose the penalty when
they turn 65 and get a new enrollment period.

### Is a $0 premium Medicare Advantage plan a bad idea?

Not necessarily. It can be a good value if your doctors are in network and the out-
of-pocket cap is reasonable. Just compare the total cost, including the cap, before
choosing.

### Where can I get free, unbiased help?

Every state has a State Health Insurance Assistance Program (SHIP) with free one-
on-one counseling. Find yours at shiphelp.org or call 1-800-MEDICARE.

**Sources:** Medicare.gov (Part B and Part D late enrollment penalties; Medigap 
open enrollment); CMS, 2026 Medicare Parts A and B premiums and deductibles fact
sheet; CMS, CY 2027 Part C benefit standards and Part D rate announcement; 2026 
Medicare Trustees Report (2027 projections); IRS Publication 969 (HSAs). Figures
for 2027 Part B are projections until CMS announces them.

**The fix for most Medicare mistakes is a calendar.**

Mark your enrollment window, your Medigap window and December 7, and most of these
costs never happen.

[See what’s changing for 2027 →](https://fantasyfrontierfun.com/medicare-open-enrollment-2027-changes/)