Finance guru Dave Ramsey warns Americans about a costly Medicare mistake to avoid

Dave Ramsey has warned Americans about a costly Medicare mistake that could lead to life sentences.

The financial guru said it’s a big healthcare decision that people need to understand – and that it’s important they take action early when they reach a certain age.

Medicare is health insurance for retirees over the age of 65, or for people with disabilities or certain illnesses.

It comes in a few different parts. Part A covers hospital costs, while Part B covers expenses such as doctor visits and outpatient care for $174.70 per month.

The Ramsey Show host said it is critical that Americans sign up for the program at the right time.

‘The rules, options and dates surrounding Medicare are crazy! Especially the registration. But it’s important to know these things,” he wrote in one after on his website.

‘Seriously, understanding it and registering correctly is super important because if you get it wrong you could be paying fines for the rest of your life.

“Yes, the stakes are so high!” he continued.

Bestselling author Ramsey explains that there are six different enrollment periods for Medicare, but only three for those enrolling for the first time.

Americans who are already receiving Social Security benefits before they turn 65 will be automatically enrolled in Parts A and B, he said.

For starters, the initial registration period is three months before the month in which you turn 65 and then the three months afterward.

If there are special circumstances, for example if you live abroad, you may also be eligible for a special registration period.

If you miss these opportunities, there is still a chance to register for the first time during the so-called ‘General Registration Period’ that runs from January 1 to March 31.

However, Ramsey warns that using this option to register usually comes with a fine.

This comes in the form of “higher premiums – and they last for the rest of your life,” he wrote.

He pointed out that Americans can enroll in Medicare Parts A and B through Social Security by visiting the program’s website, by phone or by visiting a local Social Security office.

To enroll in Part C, also called Medicare Advantage or Part D, retirees must contact the insurance company that offers the plan, Ramsey added.

It comes as the increase in Medicare Part B costs is expected to exceed Social Security’s annual cost-of-living increase by 2025.

Medicare is health insurance for retirees over the age of 65, or for people with disabilities or certain illnesses

There are six different enrollment periods for Medicare, but only three for those enrolling for the first time

Medicare consists of a number of different parts, including Part A, which covers hospital costs, and Part B, which covers health insurance

Part B currently costs $174.70 per month, but this rate will increase by $10.30 next year to $185 per month, according to the Centers for Medicare and Medicaid Services (CMS).

CMS attributes the increase both to rising program costs and to greater expected use by seniors.

This change means that many retirees will have to spend a larger portion of their monthly income on healthcare, potentially putting further pressure on budgets amid the rising cost of living.

Plan B’s 5.9 percent cost increase is greater than annual inflation, which rose 3.2 percent in the year to October.

It’s also a larger increase than next year’s cost of living adjustment (COLA), which will be 2.5 percent.

“If Part B premiums grow faster than COLA increases, [healthcare] The costs are consuming an increasing share of monthly Social Security checks,” Mary Johnson, an independent policy analyst on Social Security and Medicare, told me USA today.

However, the situation is not unusual. Medicare Part B premiums have exceeded COLA increases for years, leaving seniors increasingly out of pocket.

Part B premiums rose an average of 5.5 percent per year from 2005 to 2024, while COLAs averaged just 2.6 percent per year during the same period.

“The difference is partly due to the fact that Medicare costs are not included in the consumer price index currently used to calculate the COLA,” Johnson explained.