Medicare has been around since 1965. In all that time, you’d think people would have a better understanding of what Medicare is, how it works, and the benefits it provides. But of the 64 million people on Medicare, 75% say the program is confusing and they have a hard time understanding it.

Some of the confusion may come from all the pieces that make up Medicare.

There’s original Medicare, which consists of Part A—hospital insurance, and Part B—medical insurance. Original Medicare pays for 80% of covered expenses. The other 20% comes out of your pocket.

Medigap—also known as a Medicare supplement—can be purchased to pay for the other 20% of Medicare-approved expenses not covered by Original Medicare.

And, there are Medicare Advantage plans—sometimes referred to as all-in-one plans—which cover all of the Part A and Part B expenses, and may also provide prescription drug coverage as well as vision, dental, and hearing coverage.

Sometimes people confuse the various pieces of Medicare and if that happens, it can become a costly mistake. Here are some of the most common misconceptions and what the real story is.

 

Misconception #1: Part B Medicare is a Supplement

Part B Medicare and a supplement are two completely different pieces of your Medicare coverage.

 

Part B is medical insurance and covers things like medically necessary doctor services, preventative services, ambulance rides and some medical equipment. Part B pays 80% of Medicare-approved expenses. You pay the remaining 20%, unless you have a Medicare supplement policy.

 

The supplement or Medigap policy pays the remaining 20% not covered by Original Medicare. A supplement does not pay the annual Part B deductible, which is $226 in 2023. A supplement and Part B work in conjunction with each other, they are not the same thing.

 

Misconception #2: Long-Term Care Insurance Takes the Place of a Medigap Policy

Remember from the previous section that a Medigap policy pays the 20% of expenses not covered by Medicare. And since Medicare doesn’t cover long-term care, a Medigap policy won’t pay for any long-term care expenses. So, if you don’t have some type of long-term care coverage and need long-term care, you’ll have to pay the entire cost.

 

Misconception #3: A Medigap Policy can Supplement a Medicare Advantage Plan

It’s illegal for an insurer to sell a Medigap policy to someone who has a Medicare Advantage plan. A Medigap policy works in tandem with Part A and Part B. If you choose a Medicare Advantage plan, you are responsible for things like deductibles, copayments and coinsurance.

 

You always have the option of switching from a Medigap policy to Medicare Advantage or the other way around, if you meet the health requirements, but you cannot have Medigap and Medicare Advantage at the same time.

 

Misconception #4: Medicare Advantage Plans Supplement Medicare

A Medicare Advantage plan is offered by private insurance companies rather than the federal government. Medicare Advantage plans are stand-alone plans. While they cover all the same approved expenses as Part A and Part B in Original Medicare, they also offer a variety of additional coverages which can include drug coverage as well as vision, dental, and hearing coverage. Think of Medicare Advantage plans as an alternative to Original Medicare, not a supplement.

 

Misconception #5: Medicare Advantage and Medigap are the Same Thing

Not true. Medicare Advantage has coverage wrapped up in a single package. Medigap is only a part of an overall Medicare plan.

 

Think of it as a construction project. You can buy something that’s already built for you (Medicare Advantage), or you can buy the material and build it yourself. If you prefer to construct your own program, you start with Original Medicare (Part A and Part B) as the foundation. Next, you add a Medigap policy to pay for the 20% of costs not covered by Original Medicare. Then you cap it off with a Part D prescription drug policy. If you want vision, hearing or dental coverage, you purchase those separately as upgrades to your building project.

  • Medicare Advantage-a plan pre-built for you
  • Medigap-part of a do-it-yourself plan

 

The key to any Medicare program is knowing the facts. Before you make the decision about what’s right for you, research and do your homework. Misconceptions when buying a Medicare plan can cause problems and expenses that can be avoided.