Key Takeaways
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Misunderstanding how Medicare coverage works can result in surprise medical bills and higher out-of-pocket expenses.
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Knowing the differences between Medicare Parts A, B, C, and D helps you avoid costly assumptions about what is covered and what is not.
1. Medicare Covers All Healthcare Costs
Many people assume that Medicare pays for all their healthcare expenses once they enroll. However, this is far from the truth.
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Medicare typically covers 80% of approved medical costs, leaving you responsible for the remaining 20%.
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Certain services, such as dental, vision, hearing aids, and long-term care, are not included in Original Medicare.
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Prescription drugs are not covered under Original Medicare (Parts A and B) unless you enroll in a separate Part D plan.
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Out-of-pocket costs such as deductibles, copayments, and coinsurance can add up, so it’s important to budget accordingly.
2. Medicare Covers Long-Term Care in a Nursing Home
A common misunderstanding is that Medicare provides long-term nursing home care at no cost. In reality:
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Medicare only covers short-term skilled nursing care, typically up to 100 days following a qualifying hospital stay.
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After the first 20 days, you start paying a daily coinsurance amount, and beyond 100 days, you cover all costs.
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Custodial care (assistance with daily activities like bathing, dressing, and eating) is not covered by Medicare.
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If long-term care is needed, other options such as Medicaid or private long-term care insurance must be considered.
3. You Can Enroll in Medicare Anytime Without Penalties
Many people mistakenly believe they can enroll in Medicare whenever they want without consequences. However:
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If you don’t enroll in Medicare during your Initial Enrollment Period (IEP) (a seven-month window surrounding your 65th birthday), you may face late enrollment penalties.
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The penalty for late enrollment in Part B is 10% for each full 12-month period you were eligible but did not enroll, and this penalty applies for life.
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If you delay Part D enrollment, you may also have to pay a permanent late enrollment penalty based on the number of months you were without coverage.
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Special Enrollment Periods (SEPs) are available for those with employer coverage, but they have strict rules and deadlines.
4. Medicare Advantage Plans Work Just Like Original Medicare
Some assume that enrolling in a Medicare Advantage (Part C) plan means they have the same coverage as Original Medicare. However, there are key differences:
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Medicare Advantage plans operate under a private insurance structure and often have network restrictions.
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You may need referrals to see specialists and could face higher out-of-pocket costs if you go out of network.
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These plans often bundle hospital, medical, and prescription drug coverage, but coverage and costs can vary significantly.
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Unlike Original Medicare, some Medicare Advantage plans include extra benefits, but they may come with higher copayments or limitations on providers.
5. Medicare Automatically Covers Prescription Drugs
Many people think that prescription drugs are included in Medicare, but this is not the case unless you enroll in a Medicare Part D plan.
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Without Part D, you must pay the full cost of prescriptions out of pocket unless you have other coverage.
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Medicare Part D plans have formularies (lists of covered drugs), tiers, and out-of-pocket costs that can vary.
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Even with Part D, there are still out-of-pocket expenses such as deductibles, copayments, and coinsurance.
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In 2025, a $2,000 out-of-pocket cap on drug costs takes effect, reducing financial burden for enrollees with high prescription costs.
Avoid Costly Surprises by Understanding Your Medicare Benefits
Medicare provides essential coverage, but knowing its limitations is crucial to managing your healthcare expenses effectively. Taking time to understand what Medicare does and does not cover can prevent unexpected costs and help you make informed decisions about additional coverage options.
If you’re unsure about your choices, speak with a licensed agent listed on this website to explore plans that fit your needs.
