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Every month, thousands of Americans turn 65. By the time that landmark birthday rolls around, they've already been inundated with mail and phone calls about an important decision: choosing Medicare insurance. That flood of brochures is meant to help you choose the plans that fill in the gaps of Medicare. That's the first Medicare trap people are vulnerable to falling into, says Steve Vernon, author of "Retirement Game-Changers: Strategies for a Healthy, Financially Secure, and Fulfilling Long Life." The most common mistake people make when choosing a Medicare plan is thinking that basic Medicare will be enough. It's understandable, because people think Medicare will closely resemble the workplace insurance plan they had when they were working. "If that was enough, this will be enough," Vernon said. But Medicare doesn't equate to employment-based health insurance for several reasons. First, most insurance plans have one set of deductibles and copays. "You only need to pay one premium to obtain comprehensive coverage," Vernon said. Medicare is much more complicated, Vernon said, and "contains significant gaps that create the first trap for the unwary."

Some people may be tempted to simply go with Medicare parts A and B — one covers hospitalizations and the other covers visits to providers. Big mistake, Vernon says. Some people base this decision on their current health status. "They think they will not need additional insurance coverage," Vernon said. The first significant medical claim that arises, though, may mean paying thousands of dollars out of pocket with no coverage, Vernon says. This shock could have been prevented by purchasing either a Medicare Supplement Plan or Medicare Advantage Plan.

Simplicity vs. flexibility

The second trap is making an uninformed decision about the type of additional coverage that is best for you. Medicare Advantage plans combine traditional Medicare, parts A and B, into a single plan that often includes Part D (prescription drug coverage) benefits as well. Some people find the simplicity of Advantage plans appealing. Medicare Supplement Plans, on the other hand, are used in conjunction with traditional Medicare, parts A and B. You will also have to purchase a Part D plan to cover the costs of prescription medication. Jennie Phipps, a semi-retiree in Punta Gorda, Florida, turned to the internet and found lots of information. An insurance broker answered the rest of her questions, and Phipps chose Medicare Supplement over the Medicare Advantage for its flexibility. "With a supplement [plan], I could go anywhere for health care, while an Advantage plan limited me to providers within my network," Phipps said. She divides her time between Florida and New Orleans, where her grandchildren live, so any plan that limits access to care was out of the question. Her late husband had an Advantage plan that worked well for him while he was healthy and could limit doctor visits to his family practitioner. "But when he got cancer, he had both geographic and caregiver limitations as well as unexpectedly high copays and deductibles," Phipps said. Medicare.gov is an invaluable resource. Be wary of websites that have Medicare in their name, sometimes followed by the year. If they end in .com or .org, they most likely exist to sell you a plan. It pays to comparison shop. For instance, the cheapest and most expensive Supplement policies in major cities in Pennsylvania can vary by as much as 103 percent.

If you want to switch plans