9 Smart Ways Retirees on Medicare Can Lower Their Costs

Getting familiar with Medicare ahead of time is a good way to set yourself up for retirement. But while this government-sponsored healthcare can help you keep money in your pocket, it's a mistake to assume all the savings you get are automatic. Instead, it pays (literally) to research all the little ways you can save just by being proactive about Medicare.

Below, we list nine simple strategies that can help ensure you get Medicare's maximum health benefits and cost savings year over year.

Sign up on time

Missing your Medicare registration deadlines results in lifelong penalties. Far from one-time fees, they can increase your Medicare Part B and Part D premiums for the rest of your life.

Penalties are based on how many months you go without coverage after you become eligible, so pay close attention to your registration deadline. The sooner you sign up, the better: signing up a month late still results in a penalty, but it's much less financially burdensome than signing up two years late.

Double-check the formulary each year

A drug formulary is a list of all the medications a healthcare plan helps you pay for. Different Medicare Part D plans and Medicare Advantage plans have different formularies, so make sure to check them against any medications you're currently taking.

Formularies can change year to year, as can the medications your doctor prescribes. Make sure to check the new formulary each year during enrollment, and don't be afraid to leave a plan behind when it no longer fits your needs.

Reevaluate your options during open enrollment

Maybe you've been happy with Original Medicare to this point, but you've realized recently that you want more comprehensive coverage. During open enrollment, you're free to switch from Original Medicare to a regional Medicare Advantage plan (or vice versa). You can also compare Medicare Advantage plans and switch to another provider if your current plan isn't working out.

The comparison tool on Medicare.gov can help you quickly compare plan coverage, costs, and services so you can change plans as needed.

Go generic whenever possible

Generic medications are almost always cheaper than name-brand medications, and the difference in price can be drastic. If you have to choose between generic and name-brand drugs, always go generic, especially if your insurance plan leaves you to pay the full cost of a brand-name medication when a generic alternative is available.

Avoid out-of-network care when on Medicare Advantage

Since Medicare Advantage plans are offered by private insurance companies, they're usually regional. Services are limited to local networks, and using a service provider outside your network will typically result in a much higher bill.

If you're on Medicare Advantage, always check doctors, pharmacies, and hospitals ahead of time so you can stay in-network and affordable.

Switch to Original Medicare if you start traveling more

Unlike Medicare Advantage, Original Medicare is accepted at just about any hospital or clinic in the country. If you hope to travel frequently during retirement, Original Medicare probably makes the most sense for your budget. Otherwise, if you experience illness or injury while out of state, you could have to foot most of the bill yourself.

Take advantage of wellness programs

Some Medicare Advantage or Medigap plans may help you pay for preventive wellness programs such as weight counseling, fitness classes, and gym memberships. If you're paying for a plan with these advantages, make sure to take advantage of them.

Since you're already paying for the services, you might as well use them. More importantly, proactively taking care of your health can improve your quality of life and help you stay healthier for longer.

Plan for long-term care to reduce financial stress

When it comes to financial planning, knowing what Medicare covers is just as important as knowing what it doesn't. For instance, while Medicare can help you pay for short-term hospital stays, it doesn't cover long-term stays in nursing homes, assisted care facilities, or retirement communities.

Budgeting ahead of time for these major expenses will help you get the care you need in the future while reducing financial stress, which can only benefit your health in the long run.

Find out if you qualify for financial aid

Depending on your income level, you might qualify for financial assistance through a program like Extra Help, which shrinks low-income seniors' Medicare Part D expenses. You could also qualify for a Medicare Savings Program (MSP), a program that helps you save money on Medicare Parts A and B.

Bottom line

Opting into the right Medicare plan is a smart money moves for seniors living on a fixed income, but remember that Medicare is meant to adapt to your changing needs over the rest of your lifetime.

If your Medicare Advantage plan ups its cost or your Part D plan drops your medication, don't be shy about switching during the open enrollment period. Keep in mind that Medicare is meant to work for you, not the other way around.

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