As a licensed health insurance professional, I speak with lots of people about their retirement needs. One of those needs is Medicare and health insurance costs. In discussing Medicare coverage options with upcoming retirees I’ve learned that quite a few people have some very inaccurate understanding about Medicare. In this article, I’m going to discuss some of the most common Medicare Myths.
Myth: Medicare covers all medical expenses
Truth: Medicare actually only covers around 80% of all medical, hospital, and other expenses like Skilled Nursing Care. But if you add in Part D drug costs then that 80% can quickly drop even lower.
Here’s a list of a few things that Original Medicare does not cover:
- Long-term Care
- Almost All Dental Care
- Regular Eye Exams & Glasses
- Cosmetic Surgery
- Hearing Aids and Hearing Aid Exams
- Routine Foot Care
- Any Health Care While Traveling Outside the U.S.
Some people tell me “I have Original Medicare and they’ve paid for everything, so why should I buy expensive Medigap plans?” Even though Original Medicare covers some medical and hospital expenses, there are many out of pocket costs.
Professor John Pottow, University of Michigan Law School wrote a report in 2010 stating that the fastest growing age group of people filing Bankruptcy is ages 65 and up. According to the study he cites “Medical Expenses” as one of the primary causes for Bankruptcy in that age group. So, even with Original Medicare alone, you can still be exposed to Bankruptcy. The good news is there are plans available that can shield you from these dangers. For more information on these plans go to www.SeniorPlanHelp.com
Myth: Medicare health coverage is free.
Truth: Most people pay monthly premiums, deductibles, co-pays, and coinsurance for medical services and drugs. These numbers change yearly, but here’s what you can expect to pay in 2018:
- Part A (Hospital): No monthly premium (for most people), but there is a deductible of $1,340 (in 2018) if admitted to a hospital for a benefit period of 60 days. It’s possible to pay up to $8,040 in a year for the Part A deductibles combined
- Part B (Medical): As of 2018 most people pay a monthly premium of $134, but some people pay more depending on their income. There’s also an annual deductible of $183 that must be paid out of pocket before Medicare pays anything. Plus, there’s usually a 20% coinsurance on top of that.
- Part C (Medicare Advantage): This part is optional and is not considered a part of Original Medicare. These plans are run by private insurance companies who determine the premiums, copays, coinsurance, and deductibles. These costs can be higher than Original Medicare and often limit the types of covered care.
- Part D (Drug): These optional plans are also run by private insurance companies and have no standardized premium. These plans charge different premiums, copays, and usually includes an annual deductible as high as $405 (in 2018). Drug costs can soar into the thousands of dollars yearly.
Myth: I don’t qualify for Medicare because of my bad health (or pre-existing conditions)
Truth: Qualifying for Medicare coverage does not depend on your current health conditions. Medicare coverage is automatic for most people that qualify for Social Security and turn age 65 regardless of health. For more details on this go to www.Medicare.gov
When you turn 65 and first become eligible for Medicare Part B you enter a special period called Medigap Open Enrollment. Open Enrollment lasts for 6 months from your Part B effective date, and you’re age 65 or older. According to Medicare Open Enrollment laws, you cannot be denied a Medigap policy or charged higher rates due to past or present health conditions. Some states have additional rights under Open Enrollment so it’s important to consult a licensed health insurance professional familiar with the laws in your state.
Myth: I can enroll in Medicare anytime after I retire.
Truth: For most people, enrollment in Medicare Parts A and B happens at age 65 if they’re eligible for Social Security. Usually, this happens automatically at age 65, but not always. It’s your responsibility to ensure proper enrollment Medicare. This is very important because Medicare imposes Late Enrollment Penalties for Part B and Part D if certain conditions aren’t met. These penalties are not a one-time “slap on the wrist” type of penalty. They’re calculated based on a formula set by Medicare and must be paid for as long as your enrolled in Medicare (lifetime).
Myth: I have health insurance through my employer so I don’t need Medicare
Truth: Medicare Part A is almost always automatic at age 65 and for most people, there is no monthly premium. It’s almost always best to enroll as soon as you’re eligible. Many employer/retiree health plans actually require you to enroll in various Medicare Parts as a condition of coverage. If you’re currently covered under your (or spouse’s) employer health insurance plan, then contact your benefits manager to understand your options. You may also be able to save money by delaying enrollment in Parts B and D if your employer health plan is the same, or better than Original Medicare. Your employer benefits manager can send you a letter confirming this in writing. Be sure to keep a copy of that letter.
Myth: My Medicare costs are locked in and won’t change now that I’m enrolled.
Truth: Every year Medicare makes changes to its costs and coverages. The Part A Hospital deductible is a good example. In 2017 it was $1,316, and in 2018 it jumped to $1,340. These changes are published every year and can be found on Medicare.gov. It can be difficult for many people to keep up on all the Medicare changes every year. In addition to changes in Medicare, there are other factors that affect your costs, such as your financial situation, and your health. A licensed insurance professional can help educate you on all the changes and guide you to the plan(s) that will provide the best overall care. A good health insurance professional will never charge you a fee for their services.
Myth: I can only change Medicare Supplement Plans once a year during Open Enrollment.
Truth: People with Medicare Supplement (Medigap) plans can change from one Medigap plan letter to another plan letter, or from one Medigap insurance company to another Medigap insurance company ANY TIME as long as the new company issues a policy to you. You may subject to company underwriting in order to qualify. The most common reason for changing plans or companies is cost savings. Medigap plans are similar to Auto Insurance where you can shop around for different rates among insurance companies. Companies that offer these plans are constantly competing for your business, and frequently lower rates to draw you away from their competition. I often compare rates for my clients and always let them know if there’s a potentially better deal.
Myth: My Medigap company is better than many others
Truth: This is one of the biggest myths I’ve encountered in this business. Medicare created standardized supplemental plans that work with Original Medicare. There are 11 plans and each is assigned an alphabetic letter (like F, G, N). Each plan letter has specific benefits that it covers. Any insurance company that offers a Medigap plan must cover all of the standardized benefits assigned to that plan letter. What this means is that when comparing companies side-by-side for a specific plan letter (like Plan F), the only difference between them is the price. Medicare even admits this in their own publication (click here to read it -page 9, ⅔ down the page, bold print). Some companies offer plans at very high rates, and others offer much lower rates for the EXACT SAME BENEFITS. This is why it’s important to shop your rates every few years.
These are only some of the more common Medicare Myths. If you’re on Medicare now (or soon will be) and you have questions about your options then you can go to www.Medicare.gov Medicare can be confusing especially if you’re new to it. Knowing how to navigate through the Medicare maze can protect your financial future, increase your healthcare, and provide peace of mind in your retirement years.