Since healthcare tends to be such a big expense for retirees, a lot of older Americans tend to wait until age 65 to end their careers. That's because age 65 is when Medicare eligibility generally begins.
But as eager as you may be to sign up for Medicare, it's important to understand how the program works. Here are three Medicare myths you can't afford to believe, since buying into them could upend your retirement finances.
Image source: Getty Images.
1. You won't have to pay any premiums for coverage
Medicare consists of several parts. Part A covers hospital care, Part B covers outpatient care, and Part D covers prescription drugs. You can also opt for a Medicare Advantage plan, which generally serves as all-in-one coverage.
You might assume that you won't have to pay any premiums to get Medicare coverage. But the only part of Medicare that's generally free is Part A.
Part B comes with a monthly premium that changes annually and can cost more for higher earners. And even if you enroll in Medicare Advantage, you're still required to pay a Part B premium.
Now some Medicare enrollees do end up paying no premium for their Part D or Advantage plan coverage. But whether you're charged a premium or not depends on your plan.
And sometimes, a $0 premium plan costs more in terms of other expenses, like copays and deductibles. So all told, it's best to make room in your budget for Medicare premiums.
2. Medicare will cover all of your costs
You might assume that Medicare will pay for all of your healthcare needs, leaving you with just coinsurance or copays to manage on top of your premiums. But there are a number of services Medicare will not pay for. These include:
- Dental care
- Eye exams
- Hearing aids
- Long-term care like assisted living
It's important to know what Medicare will and won't cover so your budget isn't thrown off.
That said, some services not covered by original Medicare typically are covered by Medicare Advantage plans. But Medicare Advantage plans also come with certain rules and restrictions, so don't assume they're the better choice just because they may offer supplemental benefits on top of what Medicare covers.
3. Once you find a Medicare plan you like, it pays to stick with it
Whether you opt to stick with original Medicare plus a Part D drug plan or you decide Medicare Advantage is right for you, you'll need to choose a specific plan. But the plan you start out with isn't necessarily the plan you should keep forever.
Over time, not only can your plan's rules and costs change, but your health needs can change as well. For this reason, it's important to plan on reviewing your coverage options each year during Medicare's fall open enrollment.
You may, for example, have an Advantage plan whose network changes from one year to another. That could mean losing access to your favorite doctors if you don't make a switch.
There's a lot to know about Medicare, and finding out more prior to signing up could help you better prepare for retirement. So do your part to read up on Medicare, as it could spare you from buying into bad information that messes you up financially.
