Share This Article With Your Followers

What You May Not Know About Medicare: 5 Important Facts

Medicare provides health insurance coverage for millions of Americans over 65 and certain younger individuals with disabilities. While most people are aware of its basic structure, many are surprised to learn about some of the lesser-known aspects of Medicare. Here are five important facts that you may not know about Medicare and that could impact your healthcare and financial planning.

1. Medicare Doesn’t Cover Everything

One common misconception is that Medicare covers all healthcare costs once you turn 65. However, Medicare doesn’t cover everything. For example, it generally does not cover:

Routine dental, vision, and hearing care: Medicare does not cover most dental work (like cleanings, fillings, or dentures), routine eye exams, or hearing aids.
Long-term care: Medicare only covers short-term skilled nursing facility care following a hospital stay, not long-term care in a nursing home or assisted living.
Overseas medical care: Medicare usually doesn’t cover healthcare costs incurred outside the United States.

To cover these gaps, many beneficiaries purchase supplemental insurance, such as Medigap policies, or opt for Medicare Advantage Plans (Part C), which may include some additional benefits.

2. You May Still Have Out-of-Pocket Costs

Even with Medicare, you may face significant out-of-pocket expenses. While Part A (hospital insurance) is usually premium-free, Part B (medical insurance) comes with a standard monthly premium. Beyond that, there are deductibles, copayments, and coinsurance for services under both Parts A and B.

For instance, in 2024, the standard Part B premium is $174.70 per month. Additionally, higher-income individuals may pay more through the Income-Related Monthly Adjustment Amount (IRMAA). Understanding these costs and planning for them is essential to avoid unexpected expenses.

3. Timing Matters: Enrollment Penalties Can Be Costly

Medicare’s initial enrollment period typically starts three months before and ends three months following your 65^th birthday. If you miss Medicare’s initial enrollment period, you may be subject to a late enrollment penalty, which varies based on the type of Medicare you ae applying for. If you don’t sign up for Medicare when you’re first eligible, you could face late enrollment penalties. Here are some examples:

Part B Late Enrollment Penalty: If you don’t sign up for Part B when you’re first eligible, you may have to pay a 10% penalty for each 12-month period you could have had Part B but didn’t enroll. This penalty is added to your monthly premium for as long as you have Part B.
Part D Late Enrollment Penalty: If you go without prescription drug coverage (Part D) for 63 consecutive days or more after your Initial Enrollment Period, you may face a penalty that’s added to your premium. The penalty is 1% of the “national base beneficiary premium” multiplied by the number of months you were without coverage.

Knowing your enrollment periods and understanding when to sign up can save you from these additional costs.

4. Medicare Advantage Plans Are Not the Same as Original Medicare

Medicare Advantage Plans (Part C) are offered by private insurance companies approved by Medicare and provide all Part A and Part B benefits. However, they are not the same as Original Medicare.

Medicare Advantage Plans may have different provider networks, require referrals to see specialists, and have varying costs for services. Some plans also include additional benefits like vision, dental, and hearing coverage, or even wellness programs. However, the trade-off may include more restrictions on which doctors you can see.

It’s essential to compare all the details of any Medicare Advantage Plan you’re considering to ensure it fits your healthcare needs and lifestyle.

5. You Can Change Your Medicare Coverage

Many people believe that once they’ve chosen their Medicare plan, they’re stuck with it forever. However, you have options to change your coverage during specific times of the year:

Medicare Open Enrollment Period: From October 15 to December 7 each year, you can change your Medicare Advantage Plan or Part D prescription drug plan, switch between Medicare Advantage and Original Medicare, or join a new plan.
Medicare Advantage Open Enrollment Period: From January 1 to March 31 each year, if you are enrolled in a Medicare Advantage Plan, you can switch to another Medicare Advantage Plan or go back to Original Medicare but there may be potential medical screening.

Understanding these periods allows you to reassess your coverage and make adjustments if your healthcare needs change.

Why GHP Investment Advisors Wants You to Know

At GHP Investment Advisors, we strive to help our clients make informed financial decisions that consider their entire financial picture, including healthcare costs. We know that Medicare can be complex and that understanding the nuances of your coverage can significantly impact your financial well-being in retirement.

Being aware of these lesser-known aspects of Medicare can help you plan for unexpected expenses, avoid costly penalties, and ensure you have the right coverage for your needs. We’re here to provide guidance and resources to help you navigate Medicare and other critical retirement planning decisions. Your best research tool is Medicare’s website www.medicare.gov where you can input your personal data, and they will help analyze which plan is best for you.

If you have questions or need assistance with your Medicare decisions, don’t hesitate to reach out. Our goal is to help you feel confident and prepared for every stage of your financial journey.