Knowing these 3 things about Medicare could save you a ton of money in retirement

Many retirees find that a good portion of their expenses drop once they stop working. If you pay off your home before your career ends, then you may end up spending less on housing in retirement than you did previously. And if you no longer have a job to commute to daily, then you may find that you can reduce your transportation costs without having to buy as much gas or pay as many tolls.

But if there’s one essential expense that tends to rise in retirement, it’s healthcare. And this is due to several different factors.

Image source: Getty Images.

Aging tends to bring more health problems — and it’s hard to avoid it. And if you had exceptional coverage through your job, you may find that you face higher costs as a Medicare enrollee.

The good news, though, is that if you’re savvy with Medicare, you can set yourself up to enjoy a good amount of savings on healthcare. Here are three essential things to know about Medicare if this is a goal of yours.

1. When to initially sign up

The initial Medicare enrollment window spans seven months. It starts three months before the month you turn 65 and ends three months after that month.

If you have coverage under an eligible group health plan through your workplace, then you don’t have to worry about enrolling in Medicare during your initial enrollment period. But if not, then you definitely don’t want to delay your enrollment, as that could mean you face lifetime surcharges on your Part B premiums.

Specifically, you’ll be charged 10% more for Part B for each one-year period you were eligible for Medicare but didn’t enroll. So be careful when you should sign up.

And if you’re delaying because you already have coverage, make sure you actually have an eligible plan. That usually means a plan with 20 employees or more.

2. When to sign up for Medigap

As a Medicare subscriber, you may face many out-of-pocket costs, from hospital deductibles to coinsurance. That’s why it pays to sign up for Medigap coverage.

Also known as supplemental insurance, Medigap is designed to pick up the costs you incur for covered services. To be clear, if there’s a service that Medicare won’t pay for, like dental or eye exams, Medigap won’t help. But if you’re stuck with a costly deductible after a hospital stay, that’s where Medigap can help.

The initial Medigap enrollment window begins the first month you are enrolled in Medicare Part B and are at least 65 years old. You then have six months to sign up for coverage before you risk being denied for health reasons or stuck with higher costs.

3. How to navigate open enrollment

Medicare Open Enrollment takes place every year from October 15th to December 7th. This is not the time to sign up for coverage in the first place. Rather, it is when existing enrollees are allowed to make changes to their Medicare coverage.

It’s important to research your plan options carefully during open enrollment, because switching from one Part D drug plan to another may cause you to pay less for the drugs you take. Or, it could lead to less expensive premiums.

Similarly, if you have a Medicare Advantage plan, it’s important to see what other options you have. If you find that you’re not using many of the benefits of your current plan, that might be reason enough to switch to a plan that’s less expensive.

Even if there’s time between now and open enrollment, it’s a good idea to list the costs you face based on your coverage. These include your monthly premiums and the co-pays you’re looking at for your drugs.

It might also help to make a list of things you’d like your current plan to do better. For example, if you’re in a Medicare Advantage plan that doesn’t have provider options, this is something that could go on your wish list so you can prioritize it once your plan options become available to you in October .

The more you know about Medicare, the easier it will be to save money on your healthcare expenses. Keep these points in mind to reduce your costs and further expand your retirement income.