As my cohort enters the Medicare system, misconceptions about senior public health insurance spread through social media. At a gathering of a few friends the other day, I decided to challenge them with a Medicare “3 truths and a lie” quiz.
See if you can discern the myth among these truths before reading the discussion that follows.
» You need to “check in” with Medicare when you turn 65, even if you’re still covered by a plan at work.
» If you choose Medicare Advantage, you have a limited time to change your mind and choose Medigap.
» Medicare covers vision and dental costs.
» Medicare is going bankrupt.
A few months before you turn 65, it is essential to contact Medicare, even if you’re still covered by a plan at work. This is because you are required to have at least as good medical insurance coverage as Medicare provides.
If you find out after the fact that your company coverage was inferior to Medicare, you’ll pay higher Medicare rates (forever) when you join.
Workers at companies with 20 or more employees are entitled to stay on their company insurance. Small companies are allowed to drop you: another reason to understand your situation as you approach 65.
It is also true that Medigap’s no-strings-attached offer is limited. Your main options when you join Medicare are among basic (Part A, Part B and Part D), Medicare Advantage (usually including A and B and sometimes D), or Medicare plus Medigap (also called “supplemental insurance”).
Each part of Medicare has associated costs: monthly premiums, deductibles and co-pays.
Choosing either Medicare Advantage or Medigap helps to make your costs more predictable. MA accomplishes this through Health Maintenance Organization (HMO-type model), which requires you to use in-network services except in rare circumstances.
Medigap allows flexibility in choosing your own doctors and, depending on your plan, you may be covered for international travel.
The catch for Medigap is there are only certain times when you can choose it without regard to pre-existing conditions. The times you can freely choose Medigap with full federal protections are:
» The first time you enroll in Medicare.
» Within the first 12 months of Medicare.
» If you joined Medicare Advantage less than 12 months ago.
» If you joined MA more than a year ago, but the MA situation changes, such as they stop providing service here, or you move, or you were misled.
The third statement, about vision and dental coverage, is false. Basic Medicare does not cover vision and dental. This is a rude awakening for some seniors, particularly those who had been putting off getting hearing aids until they were 65.
However, vision and dental coverage are provided in some Medicare Advantage plans. They typically provide two dental cleanings per year, plus glasses, contacts, hearing aids and exams.
According to senior65.com, “While Medigap will cover cataract surgery costs, or serious vision issues, most vision care (eye exams, glasses, contacts) is not covered by Medigap. For routine care, you can get a stand-alone vision plan.”
Finally, the rules for Medicare financing need tweaking, but it is far from bankrupt.
Our FICA payroll taxes support both Social Security and Medicare. Both programs have built up trust funds since inception.
However, with the increasing cost of care, the influx of 10,000 Baby Boomers a day, and expanded services over the years, the Medicare surplus is estimated to dry up in 2026 if no changes are made. After that, current taxes would support payments on 89 percent.
Know the facts, and make your voice heard to keep Medicare solvent.
— Karen Telleen-Lawton serves seniors and pre-seniors as the principal of Decisive Path Fee-Only Financial Advisory in Santa Barbara. You can reach her with your financial planning questions at [email protected]. Click here to read previous columns. The opinions expressed are her own.