4 Common Medicare Mistakes
A part of our job is helping advice people on how to avoid common mistakes and pitfalls. Unfortunately, sometimes we’ll meet clients that have already created a problem that can’t be fixed. This article should help you avoid some common mistakes.
#1. - Part D Late Enrollment Penalty (LEP)
The most common mistake we see is people who incur Part D Late enrollment penalties. If you have a Part D LEP, you’ll pay an additional cost each month once you purchase a Part D plan. This penalty is for the rest of your life.
You’ll incur a late enrollment penalty if you go 63 without credible drug coverage after turning age 65. What counts as “credible” drug coverage? Credible means the coverage pays at least as well as Medicare Part D is expected to pay. Important: Not all employer plans are considered “credible coverage” in the eye of the government.
Types of Credible Coverage Can Include:
Employer coverage
VA Benefits, TRICARE, or TRICARE For Life
Union Coverage
If you worked past age 65, you’ll need to show proof you had credible coverage when you apply for Medicare. It’s called an Employment Verification Form CMS-L564. Here’s the form.
Even though you’ll show this proof to Medicare, they do not share it with your Part D insurance company. That means, after you’ve enrolled your Part D company will also reach out requesting proof that you had coverage. Generally this request will come in the mail, and you can simply attest that you had prior credible coverage. Sometimes clients ignore this request, or the mail doesn’t deliver it. If so your Part D company will then charge you a Late Enrollment Penalty even if you had credible coverage.
#2. Part B Late Enrollment Penalty (LEP)
Similar to the above, once you turn 65 or retire Medicare wants you to enroll in Part B. If you don’t enroll in Medicare Part B, you will be charged a penalty of 10% of the standard Part B premium for each year you went without coverage, for life.
Example: In 2026, the standard Part B premium is $202.90/mo. If you went 2 years without Medicare Part B, when you do sign up you’ll pay an additional $40.58 per month, for life.
If you worked past age 65, your employer plan should count as credible coverage, allowing you to avoid this penalty. Important: VA Benefits do not count as credible coverage to avoid the Part B LEP. Veterans should sign up for Part B when they can.
#3. Not Comparing Options
Frequently people have a mentality of “set it and forget it”, where once they have their coverage in place they will simply let it rollover from year to. I get it, “set it and forget it” is great because its easy. But each year Medicare plans change. If you haven’t reviewed your coverage in a while, it may not be the best coverage option available any more.
Example: Michelle has had a Medicare Supplement plan G for the past 8 years. She likes the coverage, and hasn’t worried about the price, which has increased from $110/mo when she started to $225/mo now at age 73. Michelle is in reasonably good health, and is surprised that she can purchase the same Plan G from another company for $140/mo.
On average when we help a client shop supplements, in 2025, they saved $884 per year. So sometimes it pays to check your options. We’d love to help.
#4. Paying Extra Due to High Income
Some people pay more for their Medicare coverage due to their income. Called an Income Related Medicare Adjustment Amount, IRMAA (sounds like a hurricane), is a surcharge that gets added to your Medicare Part B and Medicare Part D costs each month if your income is above a certain limit.
In 2026, those limits are $109,000/yr as an individual and $218,000/yr filing jointly. Note: These income limits are based on your 2024 adjusted gross income. For folks in this situation, Part B can cost up to $689.90/mo and Part D can cost an extra $91.00/mo above your plan premium.
IRMAA can sometimes be avoided by proper tax/income planning. Sometimes taking a little less from a 401k or making a well timed donation can help you avoid IRMAA surcharges.