One of the biggest myths about Medicare is that the program will cover your health-related needs in retirement without you having to spend a dime. In reality, Medicare coverage can be expensive.

Not only does Medicare Part B, which covers outpatient care, charge enrollees a monthly premium, but there’s an annual deductible that needs to be met and coinsurance costs to grapple with, based on the services you end up needing. While Medicare Part A, which covers hospital care, typically doesn’t require enrollees to pay a premium, there’s a hefty inpatient deductible for hospital admissions.

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Then there’s Part D, which covers prescription drugs. Not only might you face a monthly premium for your Part D plan, but you could end up on the hook for expensive copays, depending on the medications you take and the way your specific plan categorizes them.

In 2022, households consisting of Medicare enrollees spent an average of $7,000 on healthcare, accounting for 13.6% of their total spending, according to the Kaiser Family Foundation. So if you’re worried about affording your healthcare costs as a Medicare enrollee, here are some steps you can take to spend less.

1. Enroll on time

Your initial enrollment period to sign up for Medicare spans seven months. It starts three months prior to the month of your 65th birthday and ends three months after that month.

If you delay your enrollment, not only will you risk a gap in health coverage, but you’ll also risk more expensive Medicare Part B premiums for life. For each 12-month period you delay your Part B enrollment upon becoming eligible, you’ll face a 10% surcharge that’s tacked onto the cost of your monthly premiums. Signing up on time takes that surcharge out of the equation.

2. Buy Medigap insurance

If you decide to enroll in original Medicare (as opposed to Medicare Advantage, which works more like private insurance), it might be in your best interest to purchase supplemental insurance, known as Medigap. This coverage won’t pick up the tab for expenses that aren’t covered by Medicare — like dental care and eye exams. However, Medigap could cover a large share of out-of-pocket costs, like deductibles and coinsurance for services covered by Parts A and B.

That said, just as it’s important to enroll in actual Medicare on time, it’s also important to sign up for Medigap at the right time. Your initial Medigap window spans six months and starts at the first month you have coverage under Part B and are at least 65 years old. During this period, you can’t be denied Medigap coverage due to a pre-existing condition, so it’s generally your best and most affordable time to enroll.

3. Choose the right doctors

There are many healthcare professionals who accept Medicare. But if you want to limit your out-of-pocket spending, try finding doctors who accept Medicare assignment. Providers in this category have agreed to accept the Medicare-approved rate for their services.

Generally, if you’re a Part B enrollee, Medicare will pay for 80% of the approved cost of your healthcare services. The remaining 20% is your financial responsibility (though a Medigap plan might help pay for that). But doctors who don’t accept Medicare assignment can charge more for their services, leaving you with more expensive bills.

Healthcare is an expense that all retirees should budget for carefully. But with the right strategy, you can take steps to lower your out-of-pocket spending on Medicare and stretch your income further.

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