JOEL MEKLER: Why Is Medicare So Confusing?

Surveys show that older adults have low rates of health insurance literacy on Medicare.

Last week, I overheard my colleague trying to explain plan options to a new Medicare beneficiary.

The conversation went like this:

An HMO with a PDP is a no-no, a PDP with a PFFS is a go if the PFFS has no D; if the PFFS has D, then it’s an MA-PD and you can’t have a PDP. You can enroll in an MSA during the ICEP or AEP, but not the OEP or an SEP; if you want a PDP with an MSA, you can only enroll during the AEP, unless your Part D IEP and Part C ICEP overlap, in which case, have at it. You can’t pick up or change PDPs during the OEP; if you have an EGHP or VA, forget about an MSA – if you have ESRD and want an MA plan, you’ll have to wait until 2021.

While my co-worker was factually correct in what she was saying, it’s no wonder why people struggle to understand the Medicare gobbledygook. It sounded like she was singing a rap song. Medicare has its own lexicon. At last count, the Centers for Medicare and Medicaid Services online glossary consists of more than 4,500 Medicare terms and acronyms. But the reasons why people find Medicare confusing goes well beyond the acronyms.

Surveys consistently show that older adults have low rates of health insurance literacy on Medicare. In a recent Mass Mutual quiz distributed to older adults age 60-64, nearly 65 percent of people failed to answer most questions about Medicare correctly. Specifically, 42 percent of older workers believed they wouldn’t have to pay a premium for Medicare Part B. When asked about the connection between Social Security and Medicare, 37 percent of people thought they had to file for both programs simultaneously. And 34 percent were unaware that Medicare rarely covers health coverage when outside the United States.

The Consumer’s Union defines health insurance literacy as “the degree to which individuals have the knowledge, ability, and confidence to find and evaluate information about health plans, select the best plan for their own (or their family’s) financial and health circumstances, and use the plan once enrolled.” Most beneficiaries will tell you they are satisfied with their Medicare, but ask them to explain their Medicare plan and they have no clue on how it works. My point here is not to make you feel bad. In my 15 years of counseling Medicare beneficiaries and dealing with the so-called “experts” at CMS, I can tell you almost no one understands precisely how Medicare works. This is true regardless of education level, financial status, or profession.

Alongside the notion that we all have to get Medicare the day we turn 65 is the idea that once we have Medicare, we still need to keep it the rest of our lives. Not true. And especially not true in today’s economy, where people regularly move into and out of the labor force after they turn 65.

Medicare’s enrollment rules are complicated. There is a huge difference between when you can enroll and when it is best to enroll. This is complex and becoming even more difficult for many reasons. The single example is that Social Security Full Retirement Age has risen and is now 66, but Medicare eligibility has stayed the same: most are eligible for Medicare at 65.

These days, I have to rely on checklists, diagrams, and matrix charts to keep all the Medicare enrollment rules and periods straight. Far too many people make honest mistakes when trying to understand and navigate this confusing system. Retiree benefits, small employer, large employer, COBRA, spousal coverage: any or all these terms combine to make a beneficiary’s best selection very complicated, as each situation will have a different set of alternatives.

Medicare, combined with health insurance benefits for employees (and their families), has created a very wide range of coverage and cost combinations. Add to this the fact that people are frequently working beyond 65, delaying retirement, and deferring Social Security benefits. The consequences of such missteps are significant, including late enrollment penalties, higher out-of-pocket health care costs, gaps in coverage, and barriers to accessing needed services. This trend will probably not change anytime soon.

In 2019, an estimated 764,000 people with Medicare were paying a Part B Late Enrollment Penalty (LEP), with the average LEP amounting to nearly a 28 percent increase in their monthly premium. In addition to this considerable financial burden, older adults and people with disabilities often face disruptions in care continuity, unexpected health expenses, and lack of coverage because of unduly complex Medicare transitions. Clear and simple advice to those approaching eligibility could help address the problem, but today the federal government provides virtually no notification to people nearing Medicare eligibility that must actively enroll about when and how to do so.

This Medicare enrollment maze has been slowly constructed over decades as Congress has added new benefits, timelines, and exceptions. When Congress included late enrollment penalties in the Original Medicare law, it applied only to Part B late enrollment. At that time, Part C (Medicare Advantage), Part D (Medicare Prescription Drug Coverage), COBRA, and Medicare for the disabled didn’t even exist. As Congress began adding these and other benefits, each had their own enrollment rules, and yes in some cases, penalties.

Today, there are over 20 Special Enrollment Periods (SEPs) for Medicare Parts B, C, and D, plus another 7 guaranteed issue rights that allow people to switch their coverage to Medigap policies in a few specific situations. Some states even tack on their own guaranteed issue rights.

Enrolling in Medicare is not simply a one and done process. Do you know the difference between the “parts” of Medicare Part A (hospitalization), Part B (medical), Part C (Medicare Advantage), and Part D (prescription drug coverage) There are many important facts you need to understand about Medicare prior to enrolling to make sure you get the most out of the available Medicare plans and benefits.

Choosing to enroll in Original Medicare or a Medicare Advantage plan is one of the most consequential decisions an individual will make. Medicare and You, the annual document published by CMS, provides a description of benefits under Medicare and lists plans available in your area. CMS, however, doesn’t shed much light on what is important when making decisions and provides little guidance to you in making an informed decision. CMS will typically send you to its Plan Finder where you’ll find 30 or so Medicare Advantage plans available in our area, some of which include prescription drug benefits, and some that do not. You will also find a similar number of Part D stand-alone prescription drug plans available.

Millions of older Americans will continue to muddle through Medicare not understanding how enrollment periods work of finding the right mix of coverage they want. And they lack the knowledge on how to use the insurance they have. Frequently, these people will not switch plans because the initial process was so difficult. They stay in plans that don’t have the benefits they need or pay more than they should for those benefits. The path of least resistance becomes part of the individual’s routine.

Understanding Medicare can be an overwhelming process. It can also be an isolating experience if you don’t know where to get help. Contact the Pennsylvania APPRISE Helpline at (800) 783-7067. Specially trained counselors are available to answer your questions and provide you with objective, easy-to-understand information about Medicare, Medicare Advantage, Medicare Supplemental Insurance, Medicaid, and Long-Term care insurance. Best of all, APPRISE services are free.

 (Joel Mekler is a certified senior adviser. Send him your Medicare questions at

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