Call Our Team today!
1 (855) 600-0137
7 Common Medicare Misconceptions/Assumptions
Retirement planning, for many, begins in our thirties and forties. We plan out our hobbies. We plan the cruises we'll be taking. It's going to be a grand adventure!
What we don't plan for is the staggering cost of medical expenses that a person needs during retirement. On average, a couple retiring in 2019 at age 65 will need $285,000 to cover health care and medical costs in retirement, according to Money.com.
That number can come as a shock. It's an especially unpleasant surprise if coping with some common misconceptions about Medicare insurance circulating the internet these days. Here's a few to ensure a clear understanding and plan accordingly.
I Have to Choose Between Original Medicare and Medicare Advantage … Forever
Most breakdowns of Medicare say that you need to choose between two paths:
- Original Medicare (parts A and B) + Medicare Supplement Insurance Plan
- Or a Medicare Advantage Plan
Simplified explanations of Medicare make it sound like once you've made a choice between these two paths no changes can be made.
However, that is not the case! No one is locked into a decision about your Medicare insurance plan forever. If you're unhappy with the chosen path, a switch can be made at any time during the year if a Special Enrollment Period is available, or in the fall during Annual Enrollment. If you are going from a Medicare Supplement Insurance Plan to a Medicare Advantage Plan, there is a 12 month “free look” period to test out the Medicare Advantage Plan. If you decide to go back to the exact Medicare Supplement Insurance Plan you started with, you may do so during the “free look” period, no questions asked and NO UNDERWRITING. Guaranteed issue rights for a Medigap plan last during the first 6 months of eligibility for Medicare, as well as during the 12 month “free look.”
The Annual Enrollment Period, or Annual Enrollment, is a period lasting from October 15th through December 7th. Changes can be made to your Medicare plan at this time each year, including switching from Original Medicare to Medicare Advantage plans and vice-versa. Things like adding or dropping Part D can also take place, or change a Part D plan altogether.
There's also a special Medicare Advantage Open Enrollment Period that lasts from January 1st through March 31st each year. The purpose of this Medicare Advantage Open Enrollment Period is to offer an opportunity to switch to a different Medicare Advantage plan or insurance carrier. You can even drop a Medicare Advantage plan entirely between January 1 and February 14 if you decided to go back and enroll in Original Medicare only.
Also, suppose you move. Or suppose the exact Medicare Advantage plan you had stops operating in your area. Changes can be made to your plan if that happens as well. The good news is options are available to make changes throughout the year based on qualification, and as life circumstances evolve.
Medicare Covers Long-Term Care
90% of Americans believe that Medicare covers long-term care, but this isn't the case. After treatment in hospitals for illness or serious injuries, Medicare may cover time in skilled nursing facilities, but the time will be limited.
Approximately 70% of seniors will need long-term care at some point during retirement. On average, seniors may need between 2.2 and 3.7 years of long-term care, and about 20% will need more than five years of nursing-home care. It can get pricey real quick when you take costs of things like semi-private rooms into consideration. You can expect to spend around $7000 a month for rooms in long-term care facilities. Making the mistake of misunderstanding whether Medicare covers long-term care can be catastrophic.
It's prudent to plan for these costs far in advance since Medicare won't cover them. Do your best to make sure that your retirement plan reflects the need to budget for long-term care insurance or some type of planning for these costs, separate from Medicare coverage. Plans of this kind can cost anywhere from $1,500 to $2,500 annually, with variation based on coverage you choose. But it might be a reasonable expense to plan for if you have any doubt your retirement fund will be able to cover long-term care.
“The Ignite Team has been a fantastic resource for my wife and me. We couldn't be happier with the assistance they were able to provide us."
- Roger D
"All my expectations were met, which is why I called them first. They are efficient, knowledgeable and made the whole process very easy. You can trust them with all your Medicare needs!"
-Rosemary H.
"If you're looking for an experienced brokerage who know the system inside and out, look no further. You'll be guided to your to perfect solution that is most beneficial to you!"
- Walt G
You Can Enroll in Medicare As Soon As You Retire
We usually think of Medicare as retirement insurance. That's the purpose of it, but Medicare doesn't actually have anything to do with when you retire. You could decide to retire at sixty-one, but Medicare still wouldn't be available to you until you turn sixty-five years old. The only exception to this rule is if you have a qualifying disability. If you retire early, you'll need a different plan for insurance.
It makes sense to start figuring out your Medicare plan a good year in advance of your sixty-fifth birthday. If you miss signing up for coverage when you are first eligible, it's possible that you'll incur late enrollment penalties which would be due with your monthly premiums.
If you're late to enroll in Medicare and you don't get health insurance from another qualifying source, it can make late enrollment in Medicare quite expensive. How long you went without coverage informs the size of the Late Enrollment Penalty. Part A (although you may qualify for premium-free Part A) and Part B can take a long time to pay off. Part D late enrollment penalties never go away.
Medigap Pays All Out-of-Pocket Costs
It's almost, but not entirely true, that a Medigap plan means no out-of-pocket expenses for you.
Medigap or Medicare Supplement Insurance plans only work with Original Medicare. You can't buy a Medigap plan in addition to a Medicare Advantage plan. It would be one or the other.
It will be important to check with an insurance agent who specializes in Medicare health plans and has up-to-date information regarding Medigap plans to get the most up to date rate. Each lettered Medigap plan will have different coverages and costs but are standardized across the board with each insurance carrier. As recently as January 2020, new Medigap plans don't cover Part B deductibles. But since Medigap plans are backed by the Federal government, Plan G Medicare plans won't change much from one insurance provider to the next. Also, Medigap won't cover Medicare part A or B premiums.
Medigap benefits have limited uses. It won't help with Part D out-of-pocket drug prescriptions. It will only cover portions of Parts A and B. Medigap doesn't cover routine health visits, like vision and dental, which aren't covered by Medicare anyway.
If you have concerns about meeting premiums and out-of-pocket expenses, a health savings account, or HSA, will be a good idea. An HSA is an account where you can deposit pre-tax dollars. Money grows in them tax-free, and unused funds roll over from year to year. Then withdrawals from them incur zero income tax if you make those withdrawals after turning sixty-five. HSAs are good options for putting a resource in place early to pay for premiums and out-of-pocket healthcare expenses.
I Can Buy Medigap Whenever I Want
This is sort of true. You can APPLY for a Medigap policy any time. Your insurance carrier doesn't need to sell you one necessarily unless you have guaranteed issue rights. If you don't, your insurance carrier will assess your case through an underwriting process. If they don't approve your health history, you might not be accepted in a Medigap policy, or it might come at a higher premium.
Medigap Open Enrollment begins the month you turn sixty-five and have enrolled in Part B of Medicare. That open enrollment period lasts for six months. During those six months, you can enroll in a Medigap plan at the lowest available premium (prices for plans vary from state to state). You may enroll into a Medigap plan and then switch to a Medicare Advantage Plan. If you do, the only health assessment question would be for End Stage Kidney Disease, or current kidney dialysis.
There aren't a lot of times other than those when you will get guaranteed issue rights for Medigap. There is no annual opportunity to buy a Medigap plan.
You won't be able to upgrade your plan later if your health or financial circumstances change. Spend some time with a qualified insurance agent who specializes in Medicare, talking through all your options to make sure you're getting the best coverage for you.
There Is an Annual Cap on Out-of-Pocket Medicare Costs
Medicare is very different from traditional health coverage. Under Original Medicare, there is no maximum limit to out-of-pocket medical expenses. A Medigap plan will protect you from this.
There is cap to out-of-pocket expenses on a Medicare Advantage plan, however. The Federal government sets these caps, so it's possible that they might change every year. Ask a qualified insurance agent specializing in Medicare to tell you what the current out-of-pocket spending cap on the Medicare Advantage plans available in your area. That being said, individual Medicare Advantage Plans often set much lower limits. In-network spending versus out-of-network spending might have a different cap, as well.
Part D has its own framework for unexpected costs and emergencies. Bear in mind that prescriptions drug costs aren't included in the out-of-pocket cap for other parts of any Medicare plans.
Medicare Covers Dental and Vision Services
It depends on your plan whether Medicare covers dental or vision services. Original Medicare will not offer coverage for routine dental, vision or hearing services. Medigap plans don't either. Eye exams and new glasses generally will be an out of pocket expense.
Original Medicare does cover dental care and vision care in certain situations. Injury to teeth and eyes, for example. Medicare also covers glaucoma screenings for people at high risk of glaucoma. After cataract surgery, Medicare will cover one purchase of glasses or contacts. But you're on your own for most common dental or vision services.
Medicare Advantage plans, in most cases, provide coverage for routine vision, dental, and hearing services. Some more rare services, such as dental crowns or implants, might not be covered, and your benefits will likely have a cap placed on them. How much a Medicare Advantage plan will cover varies from one plan to another, since Medicare Advantage plans are private insurance plans offered through individual carriers. Shop around and see what different plans offer before making a decision.
It's important to understand as many of the benefits and options available to you as possible in order to make an informed decision to avoid unpleasant surprises about health care costs during retirement.
We check quotes from available carriers in your area
Subscribe to our Monthly Newsletter
From Ignite Insurance Group
Thanks for subscribing! Please check your email for further instructions.
We don't like spam. Our newsletter helps to educate about Medicare.
Ignite Insurance Group
169 Inverness Dr W #350
Englewood co 80111
855-600-0137
Dental Insurance Plans
Our individual dental plans are affordable and can be used for almost any provider - we are happy to give you a quote for a plan available in your area!
Connect With Us:
Copyright © 2024 Ignite Insurance Group | All rights reserved.We are Licensed in Most States. Privacy Policy Terms and Conditions