Retirement planning is complex, at best, but when you throw Medicare into the mix, it can get downright confusing. Many pre-retirees find the program hard to navigate without some guidance. Here are the facts about five common Medicare myths.
Myth One: Medicare offers free healthcare.
Fact: Not quite. The Patient Protection and Affordable Care Act, known more simply as the Affordable Care Act, allows beneficiaries an annual wellness check at no charge. Beneficiaries also are entitled to free recommended preventive screenings, such as mammograms and colonoscopies, annual wellness visits and personalized prevention plans. For most people, Medicare Part A – which covers hospital stays and services up to certain limits – does not require a premium. But that’s it. You’re still responsible for copays, coinsurance and deductibles.
For instance, you’ll pay a $1,364 deductible in 2019 before Part A coverage kicks in for hospital stays of up to 60 days.
Just like health insurance during your working years, the other parts of Medicare also have premiums, copays, coinsurance and deductibles.
- The standard monthly premium for Medicare Part B in 2019 is $135.50.
- You’ll pay more if you’re single and earn more than $85,000 or $170,000 for a married couple filing jointly.
- High earners will face a surcharge ranging from $12.40 to $77.40 per month, depending on income, for Medicare Part D prescription drug plans.
- Many Medicare beneficiaries purchase a Medigap supplemental insurance plan to help cover out-of-pocket costs.
Myth Two: Medicare covers everything.
Fact: Not true. For example, dental, vision and hearing are not covered by Medicare. And prescription drug coverage is only offered through Part D and Medicare Advantage plans. What’s more, you are responsible for the premiums, deductibles and copayments associated with the coverage you choose. However, starting in 2012, Medicare began covering more preventive services, including screening and counseling for alcohol abuse, depression and obesity. Supplemental insurance plans are available to help cover out-of-pocket costs.
Myth Three: A Medicare Advantage plan or Part D coverage will fill gaps in my coverage.
Fact: Medicare can be complicated. Medicare Advantage plans – sometimes known as Part C – offer optional coverage through private insurance companies. Many of these plans cover dental, vision, hearing and prescription drug costs not covered by Original Medicare. However, the plans may have limited networks to keep costs down.
Part D is optional prescription drug coverage that has myriad variables, such as premiums, copays, coverage gaps and coinsurance. You can choose which prescription drug plan best fits your needs.
Myth Four: Medicare may not cover me.
Fact: One major advantage of Medicare is that you can’t be rejected for coverage or be charged higher premiums because you’re too sick. However, if you’re a high earner, you’ll pay higher premiums for Medicare Part B and Part D. In addition, the Affordable Care Act now prohibits discrimination based on a pre-existing condition.
Myth Five: I will be notified when it’s time to sign up for Medicare.
Fact: No. Unless you are already receiving Social Security benefits, you must apply for Medicare. You will not receive any official notification on when or how to enroll.
If you’re over 65, still working and covered by employer healthcare, you may want to delay enrollment in part B to avoid paying for coverage you don’t need. Once you stop working, you must enroll within eight months – even if you’re receiving COBRA or retiree health benefits from your employer – to avoid permanent late penalties. For example, if you miss the deadline, you’ll pay 10% more in Part B premiums for every 12 months you delay. If you are under 65 and retired, you should enroll before your 65th birthday to avoid these penalties.
For those without employer coverage, it’s a good idea to sign up when you’re first eligible for Part B. If you’re eligible for Part B when you turn 65, for example, you’ll want to enroll during your initial enrollment period, the seven-month period that starts three months before your birth month. If you sign up in the first three months, you can avoid delays in coverage. If you sign up during your birth month or later, your start date will be delayed by one to two months.
There’s also a Medicare Open Enrollment period from October 15 to December 7 each year for Medicare Advantage or Medicare prescription drug coverage. During this time, you can:
- Switch from Original Medicare to Medicare Advantage, or vice versa
- Switch from one Medicare Advantage plan to another
- Enroll in a Part D Prescription Drug Plan for the first time
- Switch from one Part D plan to another
- Drop your Part D coverage (you won’t be able to re-enroll until the next open enrollment period, and a late enrollment penalty may apply)
Medicare.gov recommends that you review your current coverage each fall to see if you need to make changes for the following year.
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