Over the course of our years working with women at Engaging Women in Wealth, we’ve discovered that many face four similar concerns:
- Their health
- Running out of money
- Being a burden on their children
- Determining if they need to be on a budget
In many ways, the first three of these four items can all relate to healthcare and, in particular, Medicare. Like Social Security, Medicare is often shrouded in mystery. Online, on the news, and in magazines, we are fed facts and figures about Medicare that are not always accurate and are often contradictory. Whether their outlook is positive or dismal, many people have so many questions and concerns about Medicare that they do not know where to start.
For the average American, Medicare is assumed to be a complex government program we all receive at some point in our elderly years. However, Medicare offers a number of benefits if you know the facts and have a strategy in place. Let’s look at some of the biggest myths and misconceptions about Medicare:
Myth #1: Medicare and Medicaid are the Same
Because they sound similar, many believe Medicare and Medicaid are the same. Medicaid is catered to help low-income individuals and families pay for medical and long-term care. Medicare, on the other hand, is a federal program associated with Social Security. Many affluent women believe Medicare is a program for only the needy, but in reality, the benefit of Medicare is substantial enough that even the wealthy should take notice. Medicare is available to U.S. citizens 65 years of age and older regardless of their income. In fact, as of 2013, 52.3 million Americans receive Medicare.*
Myth #2: There is Only One Type of Medicare Coverage
Medicare is not the same for everyone. Depending on your needs, you can choose from four types of Medicare coverage:
Part A: Also known as “Original Medicare,” Part A takes care of medically necessary inpatient care in hospitals, as well as skilled nursing facilities, hospice, and some home health care. This benefit is free if you have worked for 10 years or more. If you are hospitalized for an illness, Part A will cover the hospital bill.
Part B: Also known as “Original Medicare,” Part B covers doctor services, lab work, diagnostic tests, medical equipment hospital outpatient care, home health care, and some preventive services. This benefit requires payment of a monthly premium. If you are in an accident, Part B pays for ambulance services.
Part C: Also known as “Medicare Advantage,” Part C is not a separate benefit, but is the part of Medicare that allows private insurance companies to provide coverage. If you have Part C, your Medicare acts like a HMO or PPO in that you receive the coverage of Part A and B through private insurance companies approved by Medicare. Many people elect to use Medicare Advantage because the plans may offer more benefits and lower total out of pocket costs.
Part D: Also known as the “Prescription Drug Coverage,” Part D helps cover the cost of prescription drugs and is administered by private insurance companies approved by Medicare.
Myth #3: Medicare Covers All Costs
There are a number of limits to what Medicare will cover. And even if Medicare covers a certain service or item, you may have to pay a deductible, coinsurance, and/or copayment. This is why it is important to determine whether you need a Medicare supplement policy or long-term care policy.
Currently, Medicare Part A and Part B does not cover**:
- Long-term care
- Most dental care
- Eye examinations related to prescribing glasses
- Cosmetic surgery
- Hearing aids and exams for fitting them
- Routine foot care
Myth #4: Medicare is Inexpensive
While many people may receive Medicare Part A without any premium fees due to work history, costs can significantly increase based on the additional Parts you choose, as well as your income. High-income earners typically have to pay an IRMAA (income related monthly adjustment amount) and there are additional monthly costs for Part B, C, and D. Furthermore, Medicare coverage and costs change every year. If your income increases, your supplemental insurance payment may go up as well. We have seen this unfortunate occurrence take a number of people by surprise.
Never assume just because you turn 65 that Medicare will be less expensive than your current insurance policy. When determining your insurance strategy, it is critical that you evaluate your options to determine a coverage and premium cost that is best for you. Whichever route you take with your insurance, review your plan every year to evaluate price and coverage adjustments.
Myth #5: You Should Sign Up for Medicare Right When You Turn 65
As explained earlier, it may be helpful to work with a knowledgeable professional to see if Medicare makes sense if you currently have insurance through active employment. Depending on your situation, it may make more sense to delay signing up for Medicare in order to avoid paying premiums on coverage you do not currently need. However, if you incorrectly put off Medicare, it could cost you 10% of the Part B premium for each year you delay enrollment. There may also be a waiting period, which could force you to be uninsured for a certain time period.
As you can see, Medicare is complex and ever-evolving. If you feel overwhelmed, you are not alone. At Engaging Women in Wealth, Deb Sims is currently offering a complementary healthcare assessment. This detailed analysis will help shed light on what you can expect to pay for Medicare and healthcare needs, which options are appropriate for you based on your healthcare needs, and more.
Contact our office at 858-756-0004 to schedule your complementary healthcare assessment.
* "Fast Facts About Medicare." http://www.ncpssm.org/Medicare/MedicareFastFacts
** "What's not covered by Part A & Part B?" http://www.medicare.gov/what-medicare-covers/not-covered/item-and-services-not-covered-by-part-a-and-b.html