As you get older, you'll likely become an enrollee in Medicare, and that will be a welcome benefit for you in this time of steep healthcare costs. It's worth learning more about the program, though, in order to understand exactly what it is and how you might make the most of it. Here are five Medicare myths -- debunked.
Myth: It's government healthcare
Yes, the U.S. government is the entity behind Medicare, and Medicare was born out of government legislation. (Specifically, President Lyndon Johnson signed it into law in 1965 as part of his Great Society.) But it's not government officials who will check you for strep throat or order blood work for you. The government is the payer for Medicare and sets up the terms of the program, but it's up to individual healthcare providers and healthcare organizations whether they want to participate or not. And most do. As of last year, about 91% of primary-care physicians accepted it, though the number who were accepting new Medicare patients was somewhat smaller, at 72%.
Myth: It's Part A and Part B -- or nothing
Medicare is less monolithic than it used to be. You can now choose to be covered by what is being referred to as "original Medicare" -- or you can opt for a newer choice -- a Medicare Advantage plan. Original Medicare includes Part A (hospital coverage), Part B (physician/medical insurance), and Part D (prescription drug coverage), which is optional. In addition, many enrollees opt to add on a private Medigap plan to pay for more of what Medicare doesn't pay.
Medicare Advantage plans, meanwhile (sometimes referred to as Part C), are offered by private insurers but are regulated by the U.S. government. They must offer at least as much coverage as original Medicare, but many go well beyond that, including prescription drug coverage, vision, dental, and so on.
Myth: It's free
Medicare may be a great bargain for many seniors, but it's not free. In fact, since 2003, it has been means-tested, with high-income seniors paying more for it.
Some of Medicare is free for most of us, and the rest of it costs something, with prices changing from year to year. Here are some costs, as of 2016:
- Part A is free for most people. Those who don't get Part A for free will pay up to $411 per month for it. There are also deductibles, such as $1,288 for each benefit period, as well as coinsurance payments. And by the way, that $1,288 deductible applies per "benefit period," with a benefit period beginning when you are admitted to a hospital or a skilled nursing facility and ending once you've not received inpatient care for 60 consecutive days. Thus, if you are in and out of hospitals frequently, you may have to pay that deductible several times in a single year.
- Part B sports a deductible of $166 per year, and it recently cost most people (individuals who two years ago earned $85,000 or less, or couples filing jointly who earned $170,000 or less) $121.80 per month. Those who earned more pay more, with the highest earners (singles who earned more than $214,000, and joint filers who earned more than $428,000) paying $389.80 per month.
- Part C is variable, because Medicare Advantage plans vary in their pricing (and also in their services -- with some, for example, offering vision and dental coverage).
- Part D, which covers prescription drugs, also varies according to which plan you choose. Those earning $85,000 or less (or $170,000 or less for couples filing jointly) will often pay no more than their plan premium, with the highest earners paying $72.90 plus their plan premium per month.
Myth: It's costly
While Medicare does cost something, there's a lot of coverage you receive through it at no cost to you (beyond your premiums). Most services and products that are deemed "medically necessary" are covered, with some costing enrollees nothing, and others requiring enrollees pay a deductible or 20% of the cost.
Annual wellness checkups are free, as are many important screenings -- such as mammograms and Pap tests, along with screenings for heart disease, colorectal cancer, prostate cancer, depression, glaucoma, hepatitis C, alcohol misuse, HIV, STDs, diabetes, and osteoporosis.
Other covered benefits include ambulance services, artificial limbs, CPAP machines, home health services, hospice care, lab tests, mental healthcare, physical therapy, skilled nursing facility care, smoking cessation counseling, and even some organ transplants. (Note that some of these are only covered in certain circumstances.)
Myth: You can enroll any time
You technically don't have to enroll at any particular time, but there's a big reason you should: If you don't, one of the most important things you should know about Medicare is when to apply for it -- because if you're late, it can really cost you. If you don't enroll during your seven-month "Initial Enrollment Period," you may face more expensive premiums for the rest of your life. (Specifically, your part B premiums, which cover medical services, but not hospital services, can rise by 10% for each year you were eligible for Medicare but didn't enroll.) Most of us are eligible for Medicare beginning at age 65. Your Initial Enrollment Period runs for the three months leading up to your 65th birthday, the month of your birthday, and the three months that follow.
If you fail to enroll during that period, you can still enroll during the "general enrollment period," which is from January 1 through March 31 of each year -- though the late penalty might apply.
Here's some good news, though: If you're already receiving Social Security benefits as you approach 65, you'll likely be automatically be enrolled in Medicare. You'll know this has happened because you'll receive your Medicare card in the mail three months before your 65th birthday. You might also avoid the penalty and be able to skip the deadline if you're still working, with employer-provided healthcare coverage, at age 65, or if you're serving as a volunteer abroad. Such people will get a special enrollment period based on when they return, when they stop working, or when their employer-provided coverage ends.
The more you know about Medicare, the better decisions you can make related to it -- and that can improve the condition of your health -- and your wallet.