By BlackRock Retirement
Here are four common misconceptions about Medicare, the federal government’s health insurance program for people who are 65 and older or disabled, that trip up people heading into retirement – and what you really need to know.
Myth 1: Medicare covers long-term care.
Reality: At least 70% of people over age 65 will need long-term care, according to the Centers for Medicare & Medicaid Services (CMS) in Baltimore, Md., which is the federal agency that runs Medicare. But Medicare generally doesn’t pay for the custodial care that typically makes up a large part of long-term care needs and costs. Instead, Medicare benefits are limited mainly to brief rehabilitation stays in nursing facilities, according to “Medicare & You 2015,” the official U.S. Medicare handbook.
Myth 2: Medicare premiums are cheaper than what I’ve been paying for private health insurance.
Reality: If you worked for a large corporation, you may wind up paying higher premiums when you switch to Medicare in retirement. And it will almost certainly seem more complicated.
There are two types of Medicare coverage: The traditional form, or “Original Medicare,” in which Medicare Part A covers hospitalization at no charge (if you qualify through your work experience), and Part B covers outpatient treatment and has sliding scale premiums. Two optional add-ons, both with their own premiums, are available to expand that coverage: Part D, which provides drug coverage, and Medicare supplemental insurance, or Medigap policies, sold by private companies.
Alternatively, you could sign up for a “Medicare Advantage Plan,” or Part C, which includes hospital and outpatient coverage. In most Advantage plans, you use the plan’s network of providers to avoid paying more, or all, of the costs. Advantage plans may, or may not, include drug coverage as well. If not, you can sign up for Part D – again, paying a separate premium. (See the coverage chart in “Medicare & You” on page 59.)
Also keep in mind that Original Medicare generally does not include
dental, hearing or vision coverage that you may have had through your
job; Advantage plans may offer such coverage, but the benefits vary from
plan to plan.
Myth 3: Now that Medicare provides drug coverage, my medication expenses will be lower in retirement than when I was working.
Reality: It depends on how generous your workplace benefits were. If you use traditional Medicare coverage, which includes Part A, Part B and possibly supplemental coverage, you would also need Medicare Part D to get the bulk of your drug coverage. If you instead use a Medicare Advantage plan, it may or may not include drug coverage. But Medicare Part D has its own premium, deductible, copayments and a coverage gap. And drug costs can vary depending on which medications you use, the plan you choose, whether you go to a pharmacy in your plan’s network, and whether the drugs you use are on your plan’s drug list, according to CMS.
Myth 4: The age for starting Medicare is any time after I turn 65 and decide to sign up.
Reality: You can postpone signing up for Medicare if you are covered under a group health plan based on current employment (your own, your spouse’s or a family member’s if you’re disabled). But if you don’t have group health coverage, and you didn’t sign up for Medicare when you were first eligible, you can only sign up in a specified window each year: between Jan. 1 and March 31. Your coverage would not start until July 1 of that year. Also, you may have to pay higher premiums for late enrollment (see "Medicare & You").
More from BlackRock Retirement: What to Know About Medicare and Long-Term Care http://www.blackrock.com/investing/planning/retirement/the-cost/long-term-care?cid=aff:medicarelongtermcare:investopedia:retirementcenter
Investopedia and BlackRock have or may have had an advertising relationship, either directly or indirectly. This post is not paid for or sponsored by BlackRock, and is separate from any advertising partnership that may exist between the companies. The views reflected within are solely those of BlackRock and their Authors.
Here are four common misconceptions about Medicare, the federal government’s health insurance program for people who are 65 and older or disabled, that trip up people heading into retirement – and what you really need to know.
Myth 1: Medicare covers long-term care.
Reality: At least 70% of people over age 65 will need long-term care, according to the Centers for Medicare & Medicaid Services (CMS) in Baltimore, Md., which is the federal agency that runs Medicare. But Medicare generally doesn’t pay for the custodial care that typically makes up a large part of long-term care needs and costs. Instead, Medicare benefits are limited mainly to brief rehabilitation stays in nursing facilities, according to “Medicare & You 2015,” the official U.S. Medicare handbook.
Myth 2: Medicare premiums are cheaper than what I’ve been paying for private health insurance.
Reality: If you worked for a large corporation, you may wind up paying higher premiums when you switch to Medicare in retirement. And it will almost certainly seem more complicated.
There are two types of Medicare coverage: The traditional form, or “Original Medicare,” in which Medicare Part A covers hospitalization at no charge (if you qualify through your work experience), and Part B covers outpatient treatment and has sliding scale premiums. Two optional add-ons, both with their own premiums, are available to expand that coverage: Part D, which provides drug coverage, and Medicare supplemental insurance, or Medigap policies, sold by private companies.
Alternatively, you could sign up for a “Medicare Advantage Plan,” or Part C, which includes hospital and outpatient coverage. In most Advantage plans, you use the plan’s network of providers to avoid paying more, or all, of the costs. Advantage plans may, or may not, include drug coverage as well. If not, you can sign up for Part D – again, paying a separate premium. (See the coverage chart in “Medicare & You” on page 59.)
Myth 3: Now that Medicare provides drug coverage, my medication expenses will be lower in retirement than when I was working.
Reality: It depends on how generous your workplace benefits were. If you use traditional Medicare coverage, which includes Part A, Part B and possibly supplemental coverage, you would also need Medicare Part D to get the bulk of your drug coverage. If you instead use a Medicare Advantage plan, it may or may not include drug coverage. But Medicare Part D has its own premium, deductible, copayments and a coverage gap. And drug costs can vary depending on which medications you use, the plan you choose, whether you go to a pharmacy in your plan’s network, and whether the drugs you use are on your plan’s drug list, according to CMS.
Myth 4: The age for starting Medicare is any time after I turn 65 and decide to sign up.
Reality: You can postpone signing up for Medicare if you are covered under a group health plan based on current employment (your own, your spouse’s or a family member’s if you’re disabled). But if you don’t have group health coverage, and you didn’t sign up for Medicare when you were first eligible, you can only sign up in a specified window each year: between Jan. 1 and March 31. Your coverage would not start until July 1 of that year. Also, you may have to pay higher premiums for late enrollment (see "Medicare & You").
More from BlackRock Retirement: What to Know About Medicare and Long-Term Care http://www.blackrock.com/investing/planning/retirement/the-cost/long-term-care?cid=aff:medicarelongtermcare:investopedia:retirementcenter
Investopedia and BlackRock have or may have had an advertising relationship, either directly or indirectly. This post is not paid for or sponsored by BlackRock, and is separate from any advertising partnership that may exist between the companies. The views reflected within are solely those of BlackRock and their Authors.
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