Although Medicare has been around since 1965, few people would call themselves experts on it. It’s a huge program with a variety of rules and options, and it can get confusing. As such, there are probably a few things about Medicare that you didn’t expect.
1. You’ll Have to Make Choices
Traditional Medicare isn’t your only option. You can choose it (Medicare Parts A and B) for hospital care and access to any doctor or hospital in the country that accepts Medicare. Or you can choose a Medicare Advantage plan, which you buy from a private insurer that provides Medicare benefits.
If you buy Medicare Parts A and B, you’ll also need to choose a Part D plan if you want prescription drug coverage. You may also want to consider buying a supplemental policy known as a Medigap plan. It can help with your out-of-pocket costs, such as deductibles. Some Medigap plans also have an out-of-pocket maximum, too, too, meaning there's an annual limit to what you'd have to pay.
If you instead choose a Medicare Advantage plan, it includes prescription drug coverage so you don’t have to sign up for a separate Part D plan. It may also offer additional coverage. But you’ll be limited to that insurer’s network of providers, and it may cost more. If you chose a Medicare Advantage plan, you can’t buy a supplemental Medigap plan.
2. There Are Several Parts to It
Unlike the health insurance you’ve probably had so far, Medicare isn’t one-stop shopping.
In addition to signing up with Medicare or a Medicare Advantage plan, you may need to enroll in Medicare Parts B and D -- which cover medical care and prescription drugs -- or you risk paying a penalty later. And you may need a supplemental plan for additional coverage, or to help you pay for out-of-pocket costs.
3. It Might Cost More Than You Think
With a traditional Medicare plan, there is no out-of-pocket maximum. That means that if you have a serious health issue, there’s no limit to what you might have to spend for your co-insurance, which is the percentage of your medical charges that are your responsibility.
Medicare Part D (remember, that’s the part for prescription medicines) does have a catastrophic threshold. That means that after you spend a certain amount out-of-pocket, its catastrophic coverage kicks in. But you’ll still pay 5% of the cost of any prescription drugs over that amount. If you take a high-priced drug, that could add up. Supplemental policies can help you bridge the cost gap.