What you don’t know about Medicare can cause financial problems

Published 10:00 pm Monday, March 7, 2016

Sometimes what you don’t know can get you in trouble. Nowhere is this truer than with Medicare. It’s not surprising to learn that that many middle-income boomers and seniors have misconceptions and a lack of understanding as to what Medicare covers and/or doesn’t pay for in our healthcare system.

Not long ago, a study was done that included two age groups comprised of 400 pre-Medicare Boomers (ages 47 to 64) and 400 older adults (ages 65 to 75) with an annual household income of between $25,000 and $75,000. While you might expect Boomers about to go on Medicare as their “new” medical insurance, or many who already have Medicare would know how much the program covers for doctor’s visits and hospital stays – they don’t. Compared to the full charge rates, Medicare pays only 33 percent for doctor’s visits and 31 percent for hospitalization, the basic components of the program’s health benefits.

You can see these variances on the CMS Medicare Summary Notices you receive if you’re a Medicare beneficiary. Where is says Claim, look at the Amount Charged versus the Medicare Approved amount. There’s often a difference, sometimes it’s rather substantial. You’ll also see a column labeled “Medicare Paid” and a “You May Be Billed” column. That’s where you can see the amount that either you’ll pay out of pocket if you don’t have Medi-Gap or Supplemental insurance, and depending on the “Gap” plan you have, you may have to pay a portion of the amount due.

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There were a few other areas that the study found where boomers and seniors just don’t know the basics of the benefits under Medicare. The study revealed that 49 percent do not understand that Medicare does not typically pay for vision or hearing care, and long-term care was found to be the least understood and the greatest perceived threat to financial security for middle-income Americans.

Two out of three (66 percent) Medicare recipients did not know if the program covers long-term care or they overestimated its long-term care coverage. Medicare pays for limited stays in a rehabilitation center, but does not pay for permanent, custodial, long-term care in a nursing facility.

How do some Americans on Medicare cope with these financial shockers? Many middle-income recipients have taken actions – 69 percent switched to generic prescriptions, 22 percent held off going to the doctor, 15 percent changed during the enrollment period to a less expensive health plan, and 12 percent reported they are now splitting pills to make their prescriptions last longer.

It makes sense to fully understand Medicare, its options and related prescription drug plans, and to consider a Medicare Advantage Plan or with traditional Medicare, also buying supplemental insurance – 77 percent do so – to pay for those services and items not covered by Medicare and for out-of-pocket expenses like the hospital deductible. Doing this can save you from some awful surprises, and possibly spare you from financial devastation.

Ron Kauffman is a consultant and expert speaker on issues of aging, Medicare and Obamacare. Ron is the author of Caring for a Loved One with Alzheimer’s Disease, available as a Kindle book on Amazon.com. His podcasts can be heard weekly at www.seniorlifestyles.net. Contact Ron at 828-696-9799 or by email at drron561@gmail.com.