While Medicare provides health care coverage for over 62 million Americans, it comes with some downsides. Let’s discuss the ugly truth about Medicare, starting with costs and coverage.
Ugly Truth About Medicare
There are many facts about Medicare that most people only find out after becoming eligible, but wish they knew beforehand. Some common beliefs include Medicare being free and covering everything. In reality, Medicare comes with cost-sharing and often necessitates additional policies through private insurance companies for comprehensive coverage.
After years of paying into Medicare through your taxes, finding out the truth can be shocking and frustrating. That’s where we come in. Proper education is key to getting on the road to the best coverage!
Part A: Free for Some
What you’ve heard about Medicare being free is partly true. For most people, there is no monthly charge for Medicare’s inpatient coverage, Part A.
What qualifies beneficiaries for premium-free Part A is the number of quarters they – or their spouse – pay into Medicare taxes while working. Otherwise, the coverage requires payment of a partial or full monthly premium.
Unfortunately, qualifying for no premium doesn’t mean you won’t pay anything for hospital visits. The first out-of-pocket cost Part A involves is the deductible you must meet before your coverage kicks in. Then, you’re responsible for coinsurance if your hospital visit exceeds 60 days.
Finally, you should be aware of benefit periods for Part A. Although Medicare runs on a calendar year, the Part A deductible applies to each benefit period. Meaning, you’ll have to meet your Part A deductible all over again if you need inpatient care again more than 60 days after discharge from a hospital or skilled nursing facility.
Part B: Delay and You May Pay More
Unlike with Part A, you’re responsible for a premium each month for your outpatient coverage through Part B – regardless of tax history. This part of Medicare is the insurance you use at the doctor’s office, and a standard premium is determined each year. Yet, Part B premiums are more expensive for higher-income individuals.
Those who earn above a certain dollar amount will need to pay an Income-Related Monthly Adjustment Amount (IRMAA) instead of the standard premium. However, you don’t need to be a high earner to be subject to a Part B premium that exceeds the standard amount. You could also face an increase in your Part B premium is through the late enrollment penalty.
Another common misconception about Medicare is that you won’t need it until you retire. People under this assumption can easily fall prey to higher premiums for as long as they have this part of Medicare. This is why although Medicare isn’t mandatory, you should be aware of the consequences of missing your Initial Enrollment Period, which is your first chance to sign up.
As the retirement age in the United States increases, many people remain employed past Medicare eligibility. While you’ll likely want to sign up for premium-free Part A at your first chance, you may be tempted to put off Part B and its monthly cost. Before making that choice, though, it’s crucial to make sure you can keep your current coverage without incurring the penalty when you eventually decide to drop it and enroll in Part B.
Part C: Not Without Disadvantages
During Medicare’s Annual Enrollment Period each fall, you may find it difficult to escape commercials singing the praises of Medicare Advantage plans. These plans represent Part C of Medicare, and you can obtain them through private insurance companies to stand in for Parts A and B.
Part C must offer everything Parts A and B offer, as Medicare pays the companies to take on your risk. Also, as the commercials say, they include benefits that Original Medicare doesn’t, and some are available with no monthly premium. Still, others return up to your full Part B premium to your Social Security check.
However, there are some facts that Medicare Advantage commercials omit. First, a $0 premium doesn’t mean free health care – Part C still includes cost-sharing, like copays and deductibles. While all Advantage plans have a maximum out-of-pocket limit, it is often very high – meaning you could still be responsible for a lot of health care costs if you don’t meet it.
Further, if you go outside of your network to receive care, you’ll need to pay out-of-pocket. On the other hand, Original Medicare (with or without a Medicare Supplement plan) doesn’t involve networks.
If you’re under 65 and eligible due to disability or are relatively healthy and alternative options don’t fit your budget, Part C could be sufficient for you. However, it’s not for everyone.
Part D: The D is for Donut Hole
If you choose Parts A and B over a Part C plan that includes prescription drug coverage, you’ll want to pick up a Part D plan. Otherwise, you may find yourself needing coverage for medications and facing a late enrollment penalty if there was a gap in your creditable drug coverage – meaning, it must be as good as Part D. Like the late enrollment penalty for Part B, its Part D counterpart lasts for as long as you have coverage.
The truth about Part D is that, like Parts A through C, it involves out-of-pocket costs. Each year, you’ll need to meet a deductible before reaching the initial coverage phase. At this point, you’ll only need to pay copays for your prescriptions.
Still, this doesn’t mean your wallet is out of the woods. Once your total drug costs reach a specific amount – which is determined for all Part D plans each year – you fall into the coverage gap. Despite the fact that its nickname is the donut hole, this phase isn’t so sweet for your budget.
While in the donut hole, coverage for your prescriptions is limited, leaving you responsible for higher costs until your drug costs qualify you for catastrophic coverage, covering all but a small percentage of your drug costs for the rest of the year.
Original Medicare: Limitations Necessitate Additional Coverage
Part A and Part B comprise Original Medicare. These are the components of the health care program that are available through the government, and there aren’t multiple options.
As you’re now aware, this coverage isn’t all-inclusive, which is why Part C and Part D exist. Original Medicare also leaves beneficiaries responsible for 20% coinsurance – hence, why Medicare Supplement (Medigap) plans exist. For the price of a monthly premium, these plans pay after Medicare and bring you up to 100% coverage.
Original Medicare doesn’t work outside the United States. Yet, most of the Medigap plan options offer coverage for emergencies abroad. So, if you enjoy traveling outside the United States, a Medicare Supplement is worth considering.
Even with a Supplement, however, Original Medicare doesn’t provide coverage for vision, dental, and hearing care – although it may expand to include these benefits in the near future.
Finally, beneficiaries interested in alternative treatments should know that Medicare doesn’t typically cover this type of care. As a rule of thumb, Medicare only covers treatments it deems medically necessary. When it comes to naturopathic remedies, Medicare only includes limited coverage for acupuncture and chiropractic services. It also doesn’t provide coverage for visits to naturopathic doctors.
Find Out More Facts About Medicare
If you’re realizing that Medicare costs more than you expected, you’re not alone. The key to understanding Medicare is education about the options and resources available to you. We have an entire team dedicated to helping you find the most affordable Medicare plans on the market. Additionally, our Facebook Community Group is here to answer your questions and provide the latest Medicare learning resources.