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 (also called Medicare Part C), which you buy from a private insurer that provides Medicare benefits.
If you choose Medicare Parts A and B (sometimes called Original Medicare), 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, meaning there's an annual limit to what you'd have to pay.
If you instead choose a Medicare Advantage plan, in most cases it will include prescription drug coverage so you don’t have to sign up for a separate Part D plan. It may also offer additional coverage like dental or eye glasses. But you’ll be limited to that insurer’s network of providers, and it may cost more. If you choose 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 outpatient 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.
4. If You Delay, You May Have to Pay
You have 7 months to sign up for Medicare. That time starts 3 months before you turn 65, the month of your birthday, and 3 months following your birthday. Some people will automatically be enrolled in Medicare Parts A and B, but others have to sign up. If you are unsure if you are automatically enrolled, it is a good idea to check with the Social Security office.
If you're not automatically enrolled and don’t enroll in Medicare during your open enrollment period, you will pay a penalty for enrolling at a later date. This penalty will occur every month you have Medicare.
The same is true if you delay enrollment in a Part D plan for prescription drugs. So don’t wait until you’re sick or need costly medicine before you sign up.
This penalty doesn’t apply if you have coverage through your job. But since some employers may require you to enroll in Medicare, check with your HR department before you turn 65.
5. You Can’t Always Get a Medigap Plan
If you enroll in an original Medicare plan, a Medigap policy acts as supplemental insurance. It pays some of the costs that Medicare doesn’t, such as copayments and deductibles.
During your Medigap open enrollment period you can buy any Medigap policy that’s available to you, regardless of your health.
But after that, you may not be able to get one, and that may be a major disadvantage if something serious comes up and you need expensive services. If you choose a Medicare Advantage plan instead of original Medicare but decide you are not happy with it, you can leave the program within the first 12 months to join or return to original Medicare (known as a “trial right”). If you had a Medigap policy before buying a Medicare Advantage plan or you bought the Medicare Advantage plan when you first turned 65, you will still be eligible to buy a Medigap policy.
6. Dental and Vision Coverage Is Limited
Medicare doesn’t cover most dental care, unless you get dental services or have an emergency dental procedure while you’re staying in a hospital.
It also doesn’t cover eye exams related to prescribing glasses. But it does cover eye exams for certain conditions, such as glaucoma and macular degeneration.
Hearing aids also aren’t covered. You’ll need supplemental insurance or a Medicare Advantage plan to help with those costs.
7. There Is No Long-Term Care Coverage
One of the biggest surprises for many people is that Medicare doesn’t cover long-term care unless it’s associated with a hospital stay and is “rehabilitative,” such as therapy to help you walk again after knee surgery.
But if you simply need help with the activities of daily living, such as dressing and bathing, Medicare doesn’t cover in-home care or nursing home care.
8. Marketplace Plans Can Complicate Things
If you’re insured with a Marketplace plan when you become eligible for Medicare, you might think you should just keep your Marketplace plan. You’d be wrong.
For one thing, if you’re getting a subsidy to help pay your premiums, most people won’t be eligible for the subsidy once they’re eligible for Medicare. (This means you could face tax penalties if you keep it.)
If you delay enrolling in Medicare Parts B or D, you’ll pay a late enrollment penalty the entire time you're on Medicare.
And if you miss your Medicare enrollment window the first time, you risk a gap in coverage while you wait for the sign-up window to roll around again.
In most cases, you’ll want to cancel your Marketplace plan and enroll in Medicare.
9. You Can Get Help
Many people don’t realize that each state has a State Health Insurance Assistance Program (SHIP) with counselors who can answer all of your Medicare questions. Visit shiphelpcenter.org to find your state SHIP. The folks at the Medicare Rights Center are also happy to field your questions. Contact them at 800-333-4114 or [email protected]