5 Questions People Get Wrong About Medicare and Medicare Advantage

Most seniors plan to enroll in Medicare once they retire. However, many soon-to-be retirees don't completely understand Medicare and how it works. What does Medicare cover? What is Medicare Advantage vs. Original Medicare? Misunderstandings about Medicare may lead to more money spent than you need, or you may miss out on important benefits.

Although many people think they understand Medicare, there are many questions people tend to get wrong. Here are some of the misconceptions about this healthcare program.

1. What does Medicare cover?

Most people are used to employer-sponsored benefit plans, which typically include a wide range of benefits like dental and vision coverage. Many believe that these types of benefits will automatically be available once they transition to Medicare. Unfortunately, this isn't the case.

The most basic Medicare coverage, Original Medicare, encompasses Medicare Part A and Part B. It does not include coverage for things like routine dental and vision services. If you enroll in Original Medicare thinking these services are covered, you might be facing an expensive bill after a routine visit!

People who need coverage for these kinds of services may find it by enrolling in a Medicare Advantage plan. Medicare Advantage plans are offered by private insurance companies, and typically expand on the benefits included in Original Medicare. Not all Medicare Advantage plans will have the same benefits, so it's important to do your research to find the right plan for your needs.

2. Can I enroll in Medicare immediately after retirement?

Many people associate retirement with Medicare enrollment. This is typically only true if you retire after you turn 65 years old and don't have qualifying health conditions and/or disabilities. Your Initial Enrollment Period (IEP) for Medicare is three months before your 65th birthday, the month you turn 65 and the three months after you turn 65. If you retire before you turn 65, you'll need to find an alternative form of healthcare until you're eligible for Medicare enrollment, unless you qualify based on disability.

Medicare isn't necessarily automatic after you turn 65. If you're already receiving Social Security benefits, you'll automatically be enrolled in Original Medicare during your IEP. If you aren't receiving Social Security benefits, you'll need to enroll at this time or you may face late enrollment penalties.

If you want to enroll in Medicare Advantage (Medicare Part C), Medigap or Medicare Prescription Drug coverage (Medicare Part D), they aren't automatic, either. You'll need to voluntarily enroll in your plans of choice during your IEP.

3. Is my Medicare plan permanent?

Many seniors feel stressed about choosing a Medicare plan when they turn 65 because they mistakenly believe that they are stuck with that plan for the rest of their lives. This is not true! Medicare offers you ways to change your coverage.

If you enroll in Original Medicare to start but want to switch to a Medicare Advantage plan later, you'll have an opportunity to do so during Medicare's Annual Enrollment Period (AEP), which runs from October 15 to December 7 each year. The reverse is also true — you can switch from a Medicare Advantage plan back to Original Medicare, or switch between Medicare Advantage plans during this time. If you aren't happy with your Medicare coverage, or your medical needs have changed, you have the option to choose the plan that's best for you year after year.

The only caveat to this is Medigap plans. You can technically buy a Medigap plan at any time. However, you only retain "guaranteed issue rights" at certain times after you sign up for Medicare. Some states have different opportunities for guaranteed issue rights around a person's birthday or anniversary with the plan. So, there may be options outside of your initial 6-month enrollment period when you can select or move to a Medigap plan without underwriting. These guaranteed issue rights ensure that a Medigap insurer cannot decline coverage or charge you a higher premium based on your medical history. If you purchase a Medigap plan during the six months following your Medicare Part B enrollment, you retain these rights. If you try to purchase Medigap outside of this period, you may be denied coverage or charged a much higher rate. It's beneficial to purchase the Medigap plan you think you'll need later as soon as possible.

4. Does Medicare cover long-term or nursing home care?

Because Medicare is a healthcare program primarily for seniors, many people are surprised to learn that Medicare plans do not cover most long-term care or nursing home services. Although a large percentage of seniors require some level of long-term or custodial care as they age, these services are not included in Original Medicare or most Medicare Advantage plans.

Most Medicare plans will cover short stays in a skilled nursing facility or nursing home if you are recovering from an illness or injury, and the care you receive is "rehabilitative." Unfortunately, if you require custodial care — assistance with daily activities like bathing and dressing — these services will not be covered long-term, regardless of whether they're administered at home or in a nursing home facility.

Seniors who anticipate the need for long-term care as they age are usually advised to save money for this type of care separately or purchase long term care coverage.

5. Does Medicare have an out-of-pocket maximum?

Most traditional insurance plans have an out-of-pocket maximum for the year — the maximum amount of money you'll spend for healthcare before your insurance plan covers the rest or provides you with "catastrophic" coverage. However, Original Medicare does not have this same structure.

If you are enrolled in Original Medicare — Medicare Part A and Part B only — there is no limit to how much you can spend out of pocket per year. Your Medicare benefits will continue to cover the same percentage they always have, even if you spend thousands of dollars in a calendar year. This can come as a shock to many seniors who may be facing extraordinary healthcare costs.

Medicare Advantage plans work differently. These plans do have out-of-pocket maximums, which are set by the federal government every year. The actual out-of-pocket maximum you'll pay will depend on the Medicare Advantage plan you choose. Some plans stick to the set maximum, while others have a much lower maximum than the federal limit.

For this reason, it's very important to keep out-of-pocket costs in mind when choosing between Original Medicare and Medicare Advantage plans.

Don't go into Medicare unprepared

Medicare can be intimidating for many people. The program is often misunderstood, and making mistakes could result in coverage gaps, limited benefits or higher healthcare costs. That's why it's crucial for all seniors to learn more about Medicare before selecting a plan. Even after you choose a Medicare plan for the year, it's a good idea to continue to explore your options and be prepared to make changes in the future.

If you need assistance learning about your Medicare plan options, the PlanEnroll team is here to help. Our licensed insurance agents are available to answer your Medicare questions, explore the benefits you're eligible for and help you make an informed decision. We also represent a range of plans that can expand your coverage. Reach out today so one of our licensed insurance agents can assist you.