Essential Medicare Decisions That Can Shape Your Retirement

Key Medicare Decisions Impacting Your Retirement

Think very carefully to avoid a world of financial backlash. Millions of seniors today are enrolled in Medicare and rely on the program to cover their health-related needs. But the Medicare decisions you make have the potential to influence your retirement finances in a very big way. Here are three to think about carefully before moving forward.

1. When to sign up

If you opt out of Medicare during that initial enrollment window, you may not face any financial penalties if you're covered by a qualifying group health plan through a job (yours or a spouse's plan). But if you don't have that qualifying coverage, enrolling late in Medicare could result in lifelong surcharges on your Part B premiums. Those could really hurt your finances, so you may want to make a point to sign up on time if you're not covered by a qualifying group plan.

2. Original Medicare or Medicare Advantage?

Signing up for Medicare Advantage could be a smart financial decision -- or not -- and the answer might largely depend on your health. It's important to weigh your options carefully from the start because while it's possible to move from original Medicare to Medicare Advantage and vice versa during your senior years, not signing up for original Medicare from the start could have consequences.

3. Whether to participate in open enrollment year after year

Continuing your coverage under the same plan every year, rather than exploring other options during annual fall open enrollment, could leave you paying more for Part D -- or for the specific drugs you take -- than is necessary. Even if you end up with a plan that seems to work for you, it's always a good thing to do some research during open enrollment to see what else is out there.

Make the right calls: Many people find that money is tight during retirement, so it pays to do what you can to make your healthcare coverage as affordable and cost-effective as possible. That means making sure to sign up for Medicare on time, choosing the right plan, and researching alternative plans that may be more suitable as your personal health-related needs change over time.

Generally speaking, the more you read up on Medicare, the better equipped you'll be to make savvy decisions. So it pays to start researching Medicare long before you're eligible to enroll.