For millions of American retirees, Medicare is literally a lifesaver. If we live long enough, most of us will someday benefit from this federal health care insurance program.
And yet, odds are good that — as with Social Security — you don’t understand Medicare nearly as well as you might think.
In late 2021, the insurance website MedicareAdvantage.com surveyed more than 1,000 Medicare beneficiaries and found that they share a widespread lack of understanding about Medicare enrollment. The study authors say this ignorance can result in seniors wasting money and missing out on benefits.
Following are the things most seniors get wrong about Medicare, and an explanation of how such things really work.
1. Premiums, deductibles and coinsurance
Anyone who has health insurance knows that it comes wrapped in a gauzy layer of confusing terminology. Unfortunately, after you are enrolled in Medicare, things don’t improve much.
Among survey respondents, the following percentages were unable to correctly define these terms:
- Deductible: 59.7%
- Coinsurance: 55.5%
- Premium: 56.1%
To clarify, a deductible is the amount you pay out of pocket for care before insurance kicks in. Coinsurance is what you often pay for services after you have met the deductible — for example, a common coinsurance requirement is 20% of service costs. And your premium is the amount you pay each month for coverage.
2. Out-of-pocket spending limits
One of the blessings of most health insurance plans is that they limit how much you are expected to pay out of pocket. You may have to shell out an uncomfortable amount of cash, but there is a ceiling on what you can owe.
However, that’s not the case with original Medicare, and a whopping 73.7% of survey respondents don’t realize they could be saddled with an unlimited amount of out-of-pocket coinsurance bills for Part A and Part B coverage. That’s one reason why Medicare supplement plans are so important if you’re choosing original Medicare.
The good news is that many Medicare Advantage plans — also known as Medicare Part C — come with out-of-pocket limits. After you hit this limit, you pay nothing for the Part A and Part B care that is included in your plan.
3. The Part D late enrollment penalty
Sometimes, a lack of knowledge can be especially costly.
Just 20% of Medicare beneficiaries were aware that there is a penalty if you sign up for Part D prescription coverage late.
The other 80% are potentially playing with costly fire. After your initial Medicare enrollment period ends, you may owe a penalty if there is a period of 63 or more consecutive days when you don’t have Medicare drug coverage or other equivalent prescription drug coverage, such as through an employer or union.
Here’s the painful kicker, according to the Centers for Medicare and Medicaid Services:
“If you have a penalty, you’ll generally have to pay it for as long as you have Medicare drug coverage.”
That’s right — the penalty is permanent. Make sure you avoid this error.
4. The fall open enrollment period
Each year, the federal government schedules an open enrollment period when you can make changes to your existing coverage. To keep things simple, this period always starts on Oct. 15 and runs through Dec. 7.
Yet, 59.7% of Medicare beneficiaries were unaware of the start date, with half of that percentage falsely believing open enrollment begins after Oct. 15.
5. Virtual services covered due to COVID-19
In the wake of the COVID-19 pandemic, “virtual health care” has become more widely available. Realizing this, the federal government now allows Medicare to cover some of these services. Yet, a large percentage of beneficiaries are unaware of that fact.
Here are the percentages of survey respondents who did not know that the following services now are covered:
- Virtual e-visits with a physical therapist: 81.9%
- Virtual telehealth visits for preventative health screenings: 56.6%
- Virtual telehealth visits for mental health counseling: 54.1%
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