7 costly Medicare mistakes to avoid

A half-century after its creation, Medicare remains a popular program, providing health care to more than 55 million seniors and disabled Americans. Yet "popular" doesn't necessarily mean it's easy to navigate.

Medicare may rival Social Security in complexity, adding to the challenges that some seniors may encounter when trying to ensure they're making the most of the program, according to "Get What's Yours for Medicare." That's the new book from Philip Moeller, who co-wrote a best-seller on Social Security called "Get What's Yours."

Medicare is complex not only because it's a 50-year-old government program with layers of rules and regulations, but also because it's dealing with the health care industry, which itself is constantly changing, Moeller told CBS MoneyWatch. The downside: It's easy to get "shafted," as his book points out. Even signing up for the program can be easily mishandled or misunderstood, leading to costly mistakes or gaps in coverage.

"It's complicated, but it doesn't have to be so complicated that you're frozen in your tracks," Moeller said. "My overall advice is don't get overwhelmed by the totality. Break it down into pieces and tackle the pieces."

Moeller, who answers questions about Medicare at his column Ask Phil at PBS.org, says he has a good view into the some of the pitfalls -- and worst-case examples -- of what can go wrong for some seniors. Often, seniors hit a snag because of misperceptions of how the program works.

Read on to learn about 7 Medicare mistakes that can cost seniors time and money.

Don't assume the government will help you

The first lesson: Seniors are on their own when it comes to managing and navigating Medicare. The government isn't going to hold your hand and guide you through the enrollment process, nor any other part of dealing with Medicare.

That can throw off enrollees who are shifting from employer-based insurance, where a health care plan is created and monitored by the employer's benefits department. To some extent, employer-sponsored health insurance provides a clear path for workers. But in the world of Medicare, seniors have to make their own way, from picking their plan to making sure they have enough coverage.

"People who are used to employer health insurance can be in for some shocks when they realize they have to make their own decisions in Medicare and that it's not an automatic process," Moeller said. "The policy won't show up on your doorstep if you do nothing."

Missing out on your sign-up window

Many Americans believe when they turn 65, they'll be automatically enrolled in Medicare, but that's not the case. And thinking otherwise can lead to costly problems, Moeller said.

Seniors face a "bewildering mix" of enrollment periods, which means they need to research their options about when to enroll as they approach their 65th birthday. In his book, Moeller highlights the case of one couple who believed they had been automatically enrolled at 65, but found out several years later when one of them was diagnosed with cancer that neither of them had coverage.

People who need Medicare when they turn 65 can start signing up three months before their birthday month. That window ends three months after their birthday month, giving them a seven-month window. But there can be a lag between the signup and when Medicare will kick in, which means seniors need to give this some forethought.

As Moeller wrote: "Step one is not to take anything for granted as you approach your 65th birthday."

Picking the wrong Medicare path

Enrollees need to pick one of two Medicare paths: Either the one called "Original Medicare" or the other called "Medicare Advantage."

Original Medicare includes Part A and Part B, with the former covering hospital insurance and the latter taking care of medical insurance, such as paying for doctor's visits. You can visit any doctor or facility that accepts payment from Medicare. Moeller also recommends a Medigap supplemental policy (which picks up the many costs Parts A and B don't) and a Part D prescription drug plan.

Medicare Advantage (MA) plans are sometimes called "Part C," and they cover both hospital and medical insurance. Two big differences are MA plans are provided by a private insurance company that contracts with Medicare to provide parts A and B, and you can generally use only in-network doctors. MA plans often include prescription drug coverage, too.

It's important to think through your health care needs and to make sure that you're picking coverage that won't leave you at risk financially. For instance, Original Medicare's Part B covers only 80 percent of procedures and expenses, with seniors covering the other 20 percent. That might not be a bad deal for people who are healthy, but it can be ruinous for seniors struggling with major health issues.

"You shouldn't design your Medicare coverage for the healthy you," Moeller said. "Design it for the sick you. It is insurance. You want it to protect you from adverse conditions."

Assuming there's a family plan

Some seniors get an unwelcome surprise when they sign up for Medicare and find out that it differs from employer-based insurance in one major way: There's no family plan.

That's a pitfall Moeller said he hears about from some seniors who are surprised to learn that Medicare offers only individual coverage. Seniors who want to sign up for Medicare but currently have spouses and children on their employer-based coverage will need to weigh the costs of shifting plans, and what it'll cost their dependents to enroll for insurance through the Affordable Care Act or other means.

Skipping the fall open-enrollment period

The fall open-enrollment period begins on Oct. 15 and extends until Dec. 7. It's a period for current Medicare enrollees to change their plans, which can mean shifting from original Medicare to Medicare Advantage, or vice versa. Seniors can also pick a new MA plan or drug coverage plan.

Every Medicare recipient should use the open-enrollment period to reevaluate their plans, Moeller said.

"It's a wonderful do-over rule for Medicare," he said. "It's like a lemon law. What if you had the right to replace that lemon car every year with a newer model, and you paid less and got a better car in the process? That's what open enrollment allows you to do."

Still, only a small percentage of enrollees are actively shopping and changing their coverage during open enrollment, Moeller said. He recommends that all seniors examine their Part D drug coverage, since the "formularies" -- or the specific drugs each plan covers -- change from year to year.

Misunderstanding overlapping policies

Many Americans keep employer-based insurance after they turn 65, and Moeller noted that seniors with family members on their plan may be better off sticking with their private insurance while also enrolling in Part A, which is free.

But it's important to understand how the policies will work together since the employer plan will usually end up as the "primary payer" -- the insurance company that pays the bills first.

There's one big exception: Seniors who work for a company with fewer than 20 employees must enroll in Medicare, because the government doesn't conside these small group plans to be "primary" payers. If you don't understand that and don't sign up for Medicare, Moeller warned, you could end up without primary insurance coverage.

Another type of overlapping coverage can provide a pitfall: Some Americans end up with both coverage through the Affordable Care Act and Medicare, which can prove costly. The Centers for Medicare and Medicaid warns that seniors who continue with their ACA plan after they turn 65 won't be eligible for tax credits.

Ignoring free help

Don't skip out on asking for help when you need it. Moeller recommended the State Health Insurance Assistance Program (SHIP), a free service staffed by counselors who help seniors navigate Medicare. Another tool: Use "control + F" on your computer keyboard to search for terms on Medicare's website.

Lastly, don't overlook help from family members.

"It's really smart to have a family member to help you with this stuff," Moeller said. "As people get older, their ability to navigate complex issues decreases. Many people on Medicare who find themselves in a care or hospital situation need someone else to take care of them," including their reviewing Medicare options.