Insurance

6 Things You May Not Know About Medicare

BY Anne Johnson TIMEJune 30, 2022 PRINT

Whether or not you are on Social Security at age 65, you are eligible for Medicare, as long as you are a U.S. citizen or lawful permanent resident. Medicare is federal health insurance for people 65 or older, and for some younger people with disabilities. Most people on Medicare have helped fund it over the years through payroll taxes.

As of October 2021, over 63 million Americans were enrolled in the program. Does Medicare cost these Americans? And will it cover all their healthcare expenses?

1. You Pay for Medicare

With a few exceptions, Medicare is not free. Even if you paid into it throughout your career, you’ll still have a monthly premium. If you are on Social Security, it will be automatically deducted monthly from your check.

Medicare premiums increase yearly. For 2022, there was a 15.5 percent increase, according to Elder Law Answers. That brought the Part B premium to $170.10 per month. Considering that the Social Security cost-of-living adjustment for 2022 was only 5.9 percent, most Medicare recipients also collecting Social Security took a hit. In addition, with inflation at 8.6 percent for May 2022, those on fixed incomes are feeling financial pressure.

2. Medicare Doesn’t Cover Everything

Medicare is broken down into Part A and Part B. According to the federal government’s Medicare website, Part A helps cover inpatient care in hospitals, home healthcare, skilled nursing facility care, and hospice care.

Note that the operative word in this definition is “helps.” Medicare doesn’t pay for the entire amount. It pays 80 percent for most outpatient care and services. You’ll be responsible for out-of-pocket deductibles, copayments, and co-insurance. If you are very ill, all these charges can add up quickly.

The Medicare website explains that Part B helps cover services from doctors and other healthcare providers, outpatient care, durable medical equipment, and preventative services like physicals. Once more, the word that stands out is “helps.” Medicare also includes copayments and co-insurance (20 percent) that come out-of-your pocket.

Medicare doesn’t include vision or dental insurance.

3. Prescription Drug Coverage Is Extra

If you need prescription drugs, you’ll need an additional policy called Part D, Medicare drug coverage. You can sign up for Part D when you first sign up for Medicare.

4. There Is an Option for Healthy Consumers

When you turn 65, you’ll have the option of choosing the original Medicare plan or a Medicare Advantage plan. Medicare Advantage is not the same as supplemental Medicare insurance (Medigap).

Medicare Advantage plans have the same coverage as the original Medicare, but may offer additional benefits like prescription drugs, vision, and dental.

If you opt for this choice, instead of paying directly for Medicare, you will pay for the Medicare Advantage plan that you choose.

Like original Medicare, you will be subject to co-insurance and deductibles. But unlike original Medicare, you will be limited in terms of doctors, healthcare providers or treatment facilities. Each Medicare Advantage plan has its own network of providers.

Not for the Ill

Although Medicare Advantage premiums look enticing, and the coverage may appear to be the same or better, it can come with heavy out-of-pocket expenses. There are separate copays for lab tests, x-rays, outpatient surgery, emergency room, and more. These expenses can add up quickly.

Although Medicare Advantage Plans can’t choose their customers, these plans are designed to discourage ill people. Copays, deductibles, unexpected costs, and denial of coverage for services deemed not medically necessary can plague sick members. Medicare Advantage is best for healthy individuals.

5. Supplemental Insurance Fills Medicare Coverage Gaps

Designed to fill in the gaps in Medicare coverage, Medigap is sold by private companies. Medigap coverage can help with copays, co-insurance, and deductibles.

Unlike Medicare Advantage plans, Medigap plans do not have networks. They allow you to choose any healthcare provider who accepts original Medicare.  And you won’t need to have a referral from your primary physician.

Medigap plans work well for those who are ill or have other health needs. They’re flexible and they keep out-of-pocket expenses down.

Medigap Limitations

Unfortunately, you cannot purchase both Medigap coverage and Medicare Advantage plans at the same time. You’ll need to choose one or the other.

Newer Medigap plans are not allowed to include prescription drug coverage. If you want prescription drug coverage, you will need to join Medicare Part D or get prescription drug coverage elsewhere.

Most Medigap plans do not include vision or dental coverage.

Some Medigap plans also provide coverage for foreign travel emergency care. But there are some limitations. Medigap plans pay 80 percent of certain emergency costs after a $250 deductible, with a lifetime limit of $50,000.

6. Penalties

If you don’t sign up for Medicare Parts A, B, and D when you are first eligible, you may regret it.

Part A: Your premium may go up 10 percent.  You may pay the higher premium for twice the number of years you didn’t sign up.

Part B: You will be assessed an additional 10 percent for each 12-month period you could have had Part B, and didn’t. That penalty will be added to your premium, for the rest of your life.

Part D:  After your initial enrollment period, if you go for more than 63 days without Part D or other drug coverage, you may owe a penalty. That penalty is based on the “national base beneficiary premium,” multiplied by the number of months you didn’t have Part D. You’ll owe that penalty as long as you have Medicare prescription drug coverage.

Take-Aways

Despite your payroll deductions over the years, you must still pay a monthly premium for Medicare. Unfortunately, Medicare generally doesn’t cover all your healthcare needs.

Medicare Advantage or Medigap plans may offer additional services or cost benefits when Medicare falls short. Each of these plans has pros and cons. If you are relatively healthy, a Medicare Advantage Plan may be sufficient and may offer you cost savings. If you have health issues, combining original Medicare with a Medigap plan may be a more practical option.

The Epoch Times Copyright © 2022 The views and opinions expressed are only those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.

Anne Johnson
Anne Johnson was a commercial property & casualty insurance agent for nine years. She was also licensed in health and life insurance. Anne went on to own an advertising agency where she worked with businesses. She has been writing about personal finance for ten years.
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