If you're not enrolled in Medicare now, there's a good chance you will be later, once you turn 65. More than 50 million Americans are enrolled in it, making it a critical part of our later-in-life healthcare. Be sure you understand how it works, though, lest you make mistakes that can cost you when you sign up for it or use it. Here are some costly misunderstandings.
Misunderstanding No. 1: You can sign up any time
Well, you can sign up any time after you hit age 65, but signing up late can cost you a lot. In a nutshell, you're eligible for Medicare at age 65, and can sign up anytime within the three months leading up to your 65th birthday, during the month of your birthday, or within the three months that follow. Miss that seven-month-long "Initial Enrollment Period" and your part B premiums (which cover medical services, but not hospital services) can rise by 10% for each year that you were eligible for Medicare but didn't enroll.
You may avoid the penalty, though, if you're among the many Americans who are already receiving Social Security benefits by the time they reach age 65. Those folks are typically enrolled in Medicare automatically. 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.
Misunderstanding No. 2: Sticking with the traditional Part A and Part B is always best
Medicare is more complicated than it may seem, with two main choices: "original" Medicare and a Medicare Advantage plan. Original Medicare consists of Part A, Part B, and very often Part D. Part A covers hospital inpatient care, skilled nursing facility care, and some home healthcare and hospice care. Part B covers physicians' services, service from other healthcare providers, certain therapies, lab tests, home healthcare, durable medical equipment (such as blood sugar monitors, wheelchairs, or crutches), and some preventive services such as screenings and vaccines. Part D offers prescription-drug coverage. There are also "Medigap" plans available, to supplement coverage.
Medicare Advantage plans are newer and are sometimes referred to as Part C. Offered by private organizations such as health insurance companies and regulated by the federal government, they must offer at least as much coverage as original Medicare (i.e., Part A and Part B benefits). They often sport more than that, though, such as vision care, dental care, and/or prescription drug coverage, to attract customers. The extras they offer can be in the form of lower copayments for services, or broader coverage. These plans can cost you less and provide more coverage.
The best choice for you depends on your needs and preferences and which Medicare Advantage plans are offered in your area. Don't just compare premiums, either, because Medicare Advantage plans may offer different co-payments, deductibles, and so on. Think about the doctors you want to be able to see, the healthcare services you need, and the prescriptions you take. Compare total expected out-of-pocket costs -- and note that while original Medicare will often have you footing 20% of many bills, a Medicare Advantage plan might charge you a low copay per doctor visit or service -- and will have an out-of-pocket spending cap, too, something original Medicare doesn't feature. (The average out-of-pocket cap was recently $5,223, but many plans feature limits below $3,000 and the limit for both 2016 and 2017 is $6,700.) Another key consideration is travel, because Medicare Advantage plans typically limit you to a local network of doctors, though the networks can be large. If you plan to travel a lot, original Medicare plans may be preferable as they're honored by providers nationwide.
Once you decide, know that you can change your mind and choose a different plan next year. In fact, it's a good idea to review all your options and their costs each year.
Misunderstanding No. 3: You can save money by only seeing a doctor when you're sick
It can seem sensible to save money by only going to the doctor when you're sick or injured, but it's counterproductive if you're on Medicare. That's because Medicare (including Medicare Advantage plans) entitles you to a wellness visit with your doctor once a year, along with many important screenings -- provided at no extra charge to enrollees. These include 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.
But wait -- there's more! Plenty of other Medicare benefits are provided at no extra charge (or have the patient paying just 20% of the Medicare-approved cost -- with a deductible applying). These include ambulance services, artificial limbs and eyes, chiropractic services, CPAP machines, durable medical equipment, home health services, hospice care, laboratory tests, mental healthcare, physical therapy, smoking cessation counseling, transplants, and more. You may also be able to take advantage of telehealth services, where patients consult and interact with healthcare providers remotely and electronically.
It should be clear that there's a lot of healthcare available to you as a Medicare enrollee that will cost you little to nothing. In many cases, you can actually save money -- not to mention perhaps lengthening you life -- by going to the doctor to have your wellness visit, screenings you're due for, and more. A screening might reveal a disease or condition that can be treated inexpensively now, instead of expensively later, when it has gotten worse.
You can improve both your physical and fiscal condition by signing up for Medicare on time, choosing the plan that suits you best, and making the most of the coverage you have.