The federal Medicare program is popular among older Americans, but that doesn’t mean it is easy to navigate.
Medicare is a complex web of health benefits serving more than 46 million seniors and disabled people.
It is easy to get confused, said Joe Baker, president of the Medicare Rights Center in New York. For instance, because the age to collect full Social Security benefits “is moving up to age 67, a lot of folks think Medicare eligibility has changed as well, but it hasn’t,” he said. “It’s still at 65.”
Here are four common Medicare misconceptions:
With Medicare, you can’t be rejected for coverage because you are too sick, and you won’t face higher premiums if you are ill. That gives Medicare a big consumer advantage over many private individual health plans that are currently allowed to deny coverage or charge higher premiums based on health status.
But if you are a high earner, you will pay a premium surcharge for Medicare Part B, which covers doctors’ visits and outpatient services, and Part D, which covers prescription drug costs.
–Medicare provides free or cheap health care.
Under the new health-care law, as of this year beneficiaries can get annual wellness check-ups at no charge. For the first time, they also are eligible for free recommended preventive screenings, such as colonoscopies and mammograms.
Medicare Part A, which covers hospital stays and services, is premium-free for most people. But that is where the freebies end.
Traditional Medicare involves a matrix of premiums, copays, coinsurance and deductibles. For instance, you will have to meet a deductible–$1,132 for 2011–before Part A coverage kicks in for hospital stays of up to 60 days.
For beneficiaries new to Medicare this year, the average premium for Medicare Part B is $115.40 a month. But if you earn more than $85,000 if you are single, or $170,000 for a married couple filing jointly, you will pay more.
And starting this year, high earners with Part D prescription-drug plans will face a surcharge ranging from $12 to $69.10 per month, depending on income.
–Medicare covers everything
Traditional Medicare doesn’t cover the costs of routine dental care, eyeglasses, hearing aids or custodial long-term care. It generally won’t cover the costs of health care you receive while traveling outside the U.S.
To get extra coverage for things such as vision care, one option is to instead go with a Medical Advantage plan, which is run by a private insurer. (With cuts in federal subsidies coming in 2012, insurers have cut the number of Advantage plans they offer.)
These plans are required to provide the same coverage as Medicare Part A and Part B, but the cost-sharing is different, said Vicki Gottlich, senior policy attorney for the Center for Medicare Advocacy in Washington.
Medicare Advantage plans can offer additional benefits, but they typically come with more restrictive doctor and hospital networks, she said.
“If you’re healthy, it might work out, but you might end up paying a lot more if you’ve got some chronic-care needs,” Gottlich said.
–You can sign up for Medicare at any time
The decision about when to sign up for Medicare often depends on the size of a person’s employer if he or she is still working as well as whether a person is getting health insurance through “active employment,” meaning he or she doesn’t have Cobra or retiree health benefits, Gottlich said.
For older people who are still working and getting employer coverage, and for their dependent spouses, it may make sense to delay signing up for Medicare to avoid paying premiums on coverage they don’t yet need. If your employer has 20 or more workers, then Medicare typically is the secondary payer and you can wait to sign up for Part B without incurring a penalty, she said.
But incorrectly putting it off can cost you 10% of the Part B premium for every 12 months you delay enrollment. What is more, you may face a waiting period, during which you will be uninsured.
A job loss often triggers confusion. Take an older spouse who has been counting on his younger wife’s employer health insurance plan for his primary coverage. If his wife is laid off, he needs to sign up for Part B coverage right away to avoid a penalty, Baker said. That is because Cobra coverage isn’t considered active employment. If the wife goes on Cobra, which extends employer group coverage to the departing worker for up to 18 months, her husband will have a special enrollment period of eight months in which he can sign up for Medicare Part B without incurring a penalty.
As soon as regular employer insurance ends, “the person with Medicare who had been relying upon employer coverage needs to rely on Medicare and enroll in Medicare B,” Baker said. “A lot of folks don’t know that.”
If you aren’t sure when you should sign up for Medicare, ask your human-resources department or call the Social Security Administration. You also can contact your state health-insurance assistance program. For questions about Medicare, call 1-800-Medicare or the Medicare Rights Center hotline at 1-800-333-4114.