Medicare is a great program. It saves seniors age 65 and up from having to pay enormously high private health-insurance premiums, and it protects them from catastrophic medical expenses. But if you've bought into one of these common misunderstandings about Medicare, you could end up making some costly mistakes as a result.
1. Medicare enrollment happens automatically at 65
Everyone becomes eligible for Medicare at age 65, but actually enrolling in the program is up to you. The only way you'll be automatically enrolled in Medicare is if you're already receiving Social Security benefits when you hit your 65th birthday. In that case, you'll be enrolled in Medicare Part A (hospital insurance) and Part B (medical insurance) as soon as you become eligible, although it's still up to you to sign up for any prescription drug coverage, Medigap, or Medicare Advantage plans.
2. I can enroll any time after age 65
The initial enrollment period for Medicare begins three months before your 65th birthday and ends three months after the end of the month during which you turned 65. If you don't enroll during this seven-month period, you'll have to wait for the next open-enrollment period -- which typically happens between Oct. 15 and Dec. 7. If you miss your initial enrollment period and then run into a health crisis in July, you'll be out of luck.
There are also penalties for late enrollment. If you don't sign up for Part A during your initial enrollment window, then your monthly premium will go up by 10% for twice the number of years you could have been enrolled but were not. For example, if you file for Medicare Part A three years after you become eligible, then you'll have to pay a higher premium for six years.
You should also sign up for Part B as soon as you're eligible. If you don't, your premium will go up 10% for every year you delayed -- permanently.
3. Medicare is free
Some parts of Medicare and some covered services are indeed free, but there are definitely some costs involved. Medicare Part A, which covers hospital services, has no premiums if you worked (and paid Medicare taxes) for at least 40 calendar quarters by the time you enroll. Medicare Part B, which covers doctor visits and similar expenses, has a premium of $134 per month in 2017, although high-income enrollees may pay higher premiums.
Other Medicare parts and plans have a wider range of premiums, often based on the type of plan and the provider. As for services, different Medicare parts and plans offer different levels of coverage for various medical expenses. Some expenses may be completely covered by Medicare, such as an annual wellness exam, while others require you to pay a copay or meet an annual deductible.
4. Medicare covers all types of healthcare expenses
Different parts of Medicare cover different types of healthcare. Medicare Part A covers only hospital-related services, while Part B covers other types of medical expenses such as doctors' visits and lab tests. Part D covers prescription expenses.
Part C, also known as Medicare Advantage, can cover additional services such as vision and dental care. Medigap helps cover some of the costs that Medicare Part A and Part B don't cover, but it doesn't include prescription coverage, dental, vision, and so on. So the exact coverage you have will depend on which parts of Medicare and which specific plans you sign up for.
5. I may not qualify for Medicare
Happily, you can't be rejected from Medicare coverage just for being sick or having a pre-existing condition. For that matter, pre-existing conditions won't raise your premiums, either. This should continue to be the case for Medicare even if Congress repeals the Affordable Care Act's pre-existing condition clause.
6. The AHCA will repeal Medicare
The American Health Care Act (AHCA), a.k.a. Trumpcare, is making its way through Congress, and if it passes, it will enact major changes in America's healthcare system. However, in its current form, the health reform bill makes no changes to Medicare -- though some say proposed cuts to Medicaid, a separate program, would indirectly shift more costs to Medicare.
It's true that Medicare is on pace to exhaust its cash reserves by 2028, which means that if no changes are made by then, benefits will necessarily be cut. However, as long as Americans are working and paying payroll taxes, this vital social program will keep chugging along.
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