Almost 67 million people are enrolled in Medicare, reports the Centers for Medicare & Medicaid Services. And one day, you might become a Medicare enrollee yourself.
There are plenty of Medicare myths circulating, and buying into them could trip you up when it’s time to sign up for coverage and estimate your healthcare costs as a retiree. With that in mind, here are some common Medicare myths—and the truth behind each one.
Medicare Myth #1: Medicare Coverage is Free
While this myth has some truth, it’s not the whole picture. Part A (hospital insurance) is generally free for those who qualify based on work history. However, Part B (outpatient medical and preventive services) has a monthly premium, and Part D drug coverage requires a separate premium and co-pays for prescriptions. Remember, Original Medicare also involves deductibles and coinsurance for various services. So, while there are no premiums for Part A for most people, there are still out-of-pocket costs to consider.
In fact, Fidelity released an estimate last year stating that the average 65-year-old retiring in 2023 could expect to spend $157,500 on healthcare and medical expenses throughout retirement. That cost is based on enrollment in Original Medicare plus a Part D drug plan.
Medicare Myth #2: You Can Sign Up for Medicare Once You Retire
You may have heard that you’re eligible for coverage under Medicare once you retire, but Medicare eligibility hinges on your age rather than your employment status.
Medicare eligibility starts at 65 so if you retire at 60, you’ll generally need to find your own health coverage for five years until you’re eligible to enroll in Medicare.
That said, there can be exceptions to this rule. You may be eligible to enroll in Medicare before age 65 if you have a disability, End-Stage Renal Disease, or ALS. Otherwise, expect to sit tight until age 65.
Medicare Myth #3: You Can’t Sign Up for Medicare if You’re Still Working
You might assume that if you’re still working and getting healthcare coverage through an employer, you’re not able to enroll in Medicare. Wrong.
Medicare eligibility isn’t tied to your employment status one way or another. If you’re still working at age 65, you can sign up for Medicare whether you have health coverage through an employer or not. In fact, some people enroll in Part A only since it doesn’t charge a monthly premium so it can serve as secondary insurance in the event of a hospital stay.
Medicare Myth #4: It’s No Big Deal to Sign Up for Medicare Late
Your Initial Enrollment Period to enroll in Medicare spans seven months. It begins three months before the month of your 65th birthday and ends three months after.
You may decide to put off your Medicare enrollment for reasons that make sense to you. But unless you’re covered by a qualifying group health plan at the time of your Initial Enrollment Period, there can be steep penalties for signing up for Medicare late.
In a nutshell, Medicare Part B will cost you 10% more for every 12-month period you could’ve signed up but didn’t. That surcharge will apply for life.
You’ll also risk a penalty on your Part D premiums if you don’t join a Part D drug plan when you first enroll in Medicare or go 63 days or more without qualifying drug coverage. From there, you’ll pay an extra 12% a year for Part D coverage. Ouch!
Medicare Myth #5: The Cost of Medicare is the Same for Everyone
We established earlier that Medicare is not free. However, the cost you pay for coverage may differ from what someone else pays.
First, the cost of a Medicare Advantage, Supplemental, and Part D plan will hinge on the specific plan you pick. However, the cost of Medicare Part B can vary from one enrollee to the next.
Each year, Medicare charges a standard monthly premium for Part B. This year, it’s $174.70. However, if you’re a higher earner, you may be subject to a surcharge on your Part B premiums known as an income-related monthly adjustment amount (IRMAA).
IRMAAs are actually based on your Modified Adjusted Gross Income (MAGI) from two years prior. So if you want to calculate your 2024 Medicare IRMAA, your 2022 MAGI is used.
IRMAA thresholds change from year to year and differ based on tax-filing status. But as an example, for 2024 purposes, IRMAAs apply to single tax filers with a MAGI above $103,000 and joint tax filers with a MAGI above $206,000.
IRMAAs are also tiered so that if, for example, you’re a single-tax filer with a 2022 MAGI of $200,000, you’re looking at a surcharge for 2024 of $384.30 per month. If you’re a single tax filer with a 2022 MAGI of $120,000, your surcharge is $69.90.
Worse yet, IRMAAs don’t just apply to Part B. They can also apply to Part D. However, those Part D surcharges are lower than the surcharges for Part B.
Medicare Myth #6: Medicare Covers Every Service You Might Need
You might assume that once you enroll in Medicare, you’ll be covered for every single possible health-related need. But this is one of those common Medicare myths that tends to throw enrollees for a financial loop.
There are a number of essential healthcare services that Medicare specifically will not cover. These include dental care, eye exams, and hearing aids. Chiropractic care, including related imaging tests, is also generally not covered by Medicare.
Medicare Myth #7: Medicare Advantage is a Better Option Than Original Medicare
Roughly 49% of Medicare enrollees are signed up for a Medicare Advantage plan. And there’s a reason for that.
Medicare Advantage plans commonly offer supplemental benefits beyond what original Medicare provides. We learned earlier that original Medicare won’t pay for eye exams or hearing aids. But a review by the U.S. Government Accountability Office found that as of 2022, 98% of Advantage plans offered vision benefits, while 94% offered hearing benefits.
That said, some of the disadvantages of Medicare Advantage might prompt you to stick to Original Medicare. For one thing, your costs under Medicare Advantage may be higher than with original Medicare. And while your Advantage plan might offer supplemental benefits, you may not be eligible for all of them.
In addition, Medicare Advantage plans limit you to a specific network of providers. And going outside your network could prove costly. So while Medicare Advantage can be a better option than original Medicare, that’s not automatically the case.
Dispel Medicare Myths with Medicare School
There are many Medicare myths not only cause confusion but could also cost you financially during your retirement years. Looking to learn more about Medicare before you or a loved one retires? Sign up for our free Medicare Workshop! Afterward, schedule a 1-on-1 meeting with one of our guides to help you find the right coverage for your golden years.
