Updated October 11, 2021
Key Findings
- Three out of four Medicare beneficiaries describe the program as “confusing and difficult to understand.”
- More than half of beneficiaries do not know when the Annual Enrollment Period (AEP) begins.
- Roughly three out of four beneficiaries incorrectly believe that Original Medicare has an annual out-pocket spending limit to protect against high medical costs.
- Four out of five beneficiaries do not know the earliest date that one may sign up for Medicare.
- Large majorities of beneficiaries are unable to define basic Medicare terms, despite a self-reported extreme confidence in their ability to do so.
- More than four out of five Medicare beneficiaries falsely believe the program is only for people age 65 and over.
- High percentages of beneficiaries are unaware that Medicare covers certain services, or they incorrectly believe it covers others.
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According to our survey of over 1,000 Medicare beneficiaries, three out of every four beneficiaries describe the government health insurance program as “confusing and difficult to understand.” And the overall lack of knowledge about the Medicare enrollment process, costs and benefits are putting millions of seniors and people with disabilities at potential risk of lapses in coverage, wasted spending and missed opportunities for critical benefits and services.
The survey revealed some startling realities about how little Medicare beneficiaries understand the program and the various risks they may be exposed to as a result.
“Like many types of insurance, Medicare can be difficult to understand, and beneficiaries often fail to take advantage of their coverage as a result.”
– Licensed health insurance agent and Medicare expert Rebekah Etheredge
The Cost of Medicare Confusion
The survey showed that Medicare beneficiaries’ confusion about the program begins with a lack of understanding about basic health insurance terms that apply broadly even to individual and employer-sponsored insurance plans.
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More than half of beneficiaries were unable to correctly define a premium, a deductible or coinsurance. The majority of beneficiaries also could not correctly identify other potentially very costly aspects of Medicare, including the Medicare Part A deductible, Medicare excess charges and the lack of out-of-pocket spending limits.
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Medicare Part A Deductibles
While most Medicare beneficiaries were unable to identify a deductible, an even higher percentage didn’t know how the Medicare Part A deductible works. Nearly nine out of 10 beneficiaries incorrectly believe the Part A deductible operates on an annual basis when in fact, the Part A deductible operates on a cycle of “benefit periods” that can reset in as few as 60 days after being discharged from inpatient care.
Each time a benefit period resets, so too does the deductible. A senior who faces multiple hospitalizations within the same year could be left responsible for satisfying multiple Part A deductibles in the same calendar year.
With the Part A deductible set at $1,556 per benefit period in 2022 (and typically rising every year), having to pay more than one of them in the same year could be crippling to one’s finances.
Medicare and Out-of-Pocket Spending Limits
Three out of four beneficiaries falsely believe that Original Medicare (Medicare Parts A and B) has an annual out-of-pocket spending limit, when no such limit exists. Theoretically speaking, Original Medicare beneficiaries with no supplement plan are responsible for an infinite amount of health care costs such as Medicare deductibles, coinsurance, copays and more.
Medicare Excess Charges
Not all doctors and other health care providers who treat Medicare patients are required to charge the same amount. Certain providers, because of their contract with Medicare, are allowed to charge a patient up to 15% more than the Medicare-approved amount. This is known as a Medicare “excess charge.”
Nearly a quarter of beneficiaries are unaware that certain health care providers can charge patients more than the Medicare-approved amount for their services. Lack of awareness about these out-of-pocket costs could leave some beneficiaries vulnerable to potentially high health care costs and "surprise" medical bills.
Medicare Eligibility and Enrollment Are Difficult for Many to Understand
Medicare has several different important enrollment periods, eligibility rules and sign-up processes related to different types of coverage and circumstances. The survey revealed most beneficiaries are having a hard time navigating their health coverage complexities.
Medicare Eligibility
More than three out of four beneficiaries incorrectly believe that Medicare is only available to those ages 65 and over. In fact, Medicare is also available to those under the age of 65 who have a qualifying disability, and roughly 15% of the Medicare population has not yet turned 65.1
64% of beneficiaries incorrectly believe that you are automatically eligible for Medicare if you qualify for Medicaid. While some 18% of the Medicare population is also enrolled in Medicaid, having Medicaid is not a qualification to enroll in Medicare on its own.2
Medicare Enrollment
Most people are eligible to sign up for Medicare beginning three months before their 65th birthday. But more than 80% of beneficiaries were unaware of this initial enrollment period.
If you are not collecting Social Security (or Railroad Retirement Board) benefits at least four months before your 65th birthday, you will not be automatically enrolled in Medicare and must take the steps to manually enroll. However, Medicare will not contact you to notify you that it is time to enroll.
Nearly three out of four beneficiaries incorrectly believe that the Centers for Medicare & Medicaid Services (CMS) will notify you when it’s time to enroll if you do not qualify for automatic enrollment.
Those who fail to enroll in Medicare upon turning 65 and don’t have other qualifying health coverage will typically not only be left without coverage but can also be slapped with late enrollment penalties once they do finally sign up.
Depending on your situation, you may be subject to late enrollment penalties for as long as you remain enrolled in Medicare if you fail to enroll in Medicare when you’re first eligible. But more than one in four beneficiaries were unaware of the Medicare Part B late enrollment penalty, which is a 10% increase in your monthly Part B premium for every 12-month period that you were eligible to sign up but did not.
80% of beneficiaries weren’t aware of the Part D late enrollment penalty. Beneficiaries who experience a lapse in “creditable drug coverage” for 63 straight days can face penalties upon signing up for a Medicare Part D plan.
The Part D late enrollment penalty is typically 1% of the national base beneficiary premium for every month that the person did not have creditable drug coverage. In 2022, the national base beneficiary premium is $33.37.
While 1% may not seem like much, someone who goes one year without creditable drug coverage can suddenly face a 12% penalty on top of their monthly Part D drug plan premium. And just like the Part B penalty, the Part D late enrollment fee remains in place for as long as you maintain coverage.
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Once they're enrolled in Medicare, the Annual Enrollment Period (AEP, also called the fall Medicare Open Enrollment Period) may be the only opportunity each year many beneficiaries have to make changes to their coverage.
AEP runs from October 15 to December 7 each year, but fewer than half of survey respondents were able to correctly identify the start date of the Annual Enrollment Period.
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Coverage Misunderstandings May Lead Beneficiaries to Miss Out on Important Benefits
Eligibility and enrollment aside, many Medicare beneficiaries don’t have a solid understanding of the benefits available to them.
Over one in four beneficiaries incorrectly believed that Original Medicare covers prescription drugs, while a significant percentage of beneficiaries wrongly believe Original Medicare covers prescription glasses and contact lenses (22%), insulin pens or syringes (27%), routine dental care (25%) and all costs of ambulance transportation (28%).
An even higher percentage of beneficiaries incorrectly think that Medicare does not cover things like an annual wellness visit (62%), medically necessary walkers and wheelchairs (68%), hospice care (66%), flu shots (60%) and mental health care (59%).
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A lack of knowledge surrounding your Medicare benefits can be especially troubling during a pandemic. More than a third of beneficiaries did not know Medicare would cover COVID-19 hospitalizations or COVID-19 lab tests. And between 53% and 83% didn’t know Medicare covered certain virtual telehealth services that can be critical during a pandemic.
Original Medicare can cover a number of benefits either directly or indirectly related to COVID-19. Those benefits include:
- Lab test for COVID-19
- A COVID-19 vaccine
- Medically necessary hospitalizations due to a COVID-19 diagnosis
- Telehealth visits for preventive health screenings
- Telehealth visits for mental health counseling
- Virtual E-visits with a physical therapist
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Despite evidence of a widespread lack of knowledge about Medicare – and a high percentage of beneficiaries admitting that Medicare is confusing and difficult to understand – many of the same beneficiaries reported a high amount of confidence in their knowledge of Medicare terms, their understanding of Medicare coverage and their ability to accurately calculate their out-of-pocket costs.
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More than 77% of beneficiaries reported they are confident they are enrolled in the best Medicare coverage for their health needs and budget.
Conclusion
A high percentage of Medicare beneficiaries lack critical knowledge about Medicare eligibility rules, enrollment processes and available benefits.
These knowledge gaps may be costing beneficiaries money, creating lapses in coverage and causing beneficiaries to miss out on important benefits.
Methodology and Data Notes
This survey was conducted Sep. 28 through Oct. 7, 2021, using an audience pool of 1,087 respondents. Participants were filtered based on completion time and failure to follow written instructions within the survey.
Margin of error: +/- 4% (95% confidence interval)
This survey relies on self-reported data.
1 Kaiser Family Foundation (KFF). (Feb. 13, 2019). An Overview of Medicare. https://www.kff.org/medicare/issue-brief/an-overview-of-medicare.
2 KFF. (Data accessed Jan. 2021). Dual Eligibles as a Percent of Total Medicare Beneficiaries. https://www.kff.org/medicaid/state-indicator/duals-as-a-of-medicare-beneficiaries.
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