Medicare provides healthcare for tens of millions of Americans. However, many people don't understand even the basics of how Medicare works, and there are many myths about Medicare coverage that mislead those trying to get information about the program. Below, we'll go through three of those myths and go past the misconceptions to get at the truth.
Myth 1: Medicare covers all of your healthcare needs.
Medicare is a great program that provides vital services for participants. But Medicare doesn't cover everything. Moreover, even the services that Medicare does cover don't come entirely free of charge in most cases.
For example, Medicare doesn't provide coverage for a host of medical services, including long-term care, most dental care, and eye examinations related to prescribing glasses or contact lenses. Cosmetic surgery, acupuncture, and hearing aids aren't cover, and dentures and routine foot care are also outside the scope of Medicare coverage.
For services that Medicare does cover, you'll typically pay some of the cost. Deductibles apply to require a certain amount of out-of-pocket cost up front for most services, and copayments can be necessary as well. For many services, Medicare covers 80% of the cost, leaving you with a 20% coinsurance amount that you'll need to cover. For that reason, many Medicare participants obtain separate private Medigap insurance coverage to pay for what Medicare won't cover.
Myth 2: 65 is the age when everyone takes Medicare.
The most common age to take Medicare is 65, because that's when most people become eligible for Medicare for the first time. But certain conditions allow you to get Medicare coverage earlier. For example, if you have an illness, injury, or disabling condition that qualifies you for Social Security disability benefits, then you can automatically become eligible for Medicare once you've gotten those benefits for a total of 24 months, regardless of age.
In addition, certain conditions allow you to qualify for Medicare more quickly without a 24-month disability period. Those who suffer from amyotrophic lateral sclerosis, also known as ALS or Lou Gehrig's disease, become eligible for Medicare in the month that they first become entitled to disability benefits under Social Security. Also, those who have permanent kidney failure, also referred to as end-stage renal disease and characterized by needing a kidney transplant or regular dialysis treatments, can qualify for Medicare as long as they or their spouse has paid taxes into the Social Security system for a set period of time.
On the other hand, for some people, it makes sense to wait beyond 65 to claim Medicare. If you still have group coverage through your employer or your spouse's employer and the employer covers 20 or more employees, then the group coverage is primary, with Medicare playing a secondary role as payor. In those circumstances, you might choose not to apply for Medicare until your group coverage ends. You can do so without penalty as long as you sign up for Medicare within a set period after the end of your group coverage.
Myth 3: Everyone pays the same for Medicare.
Some people erroneously believe that everyone pays the same amount for Medicare coverage. However, changes in the way premiums are calculated impose surcharges on high-income individuals.
For example, in 2016, the standard charge is $121.80 per month for their Medicare Part B coverage. However, for single filers with income of $85,000 or more or joint filers with income of $170,000 or more, additional costs apply. For single filers with incomes of $85,000 to $107,000, an extra $48.70 per month is required. From $107,000 to $160,000, the extra monthly charge is $121.80, doubling the original premium. From $160,000 to $214,000, the extra amount is $194.90 per month. Higher-income individuals tack on $278 per month in additional premiums. The income limits for joint filers are exactly twice what single filers pay. Similar add-ons are imposed for Part D prescription drug coverage.
Medicare is a complicated program, and it's easy to get confused about exactly what it does and doesn't cover. By keeping these three popular myths in mind and knowing the real answers behind them, you'll be in a better position than most to understand exactly what Medicare will do for you -- and when you'll need to look elsewhere to get the peace of mind you'll want in your retirement.