Boomers Are Clueless About Medicare

Tom Murphy
RedwoodAge.com

As boomers drift steadily towards retirement, few of them have a clue about how Medicare works.

According to a survey conducted by the National Association of Insurance Commissioners, only about 36 percent of boomers knew that Medicare starts at age 65. One in five boomers thought it began at 62, and many thought it was as young as 59 1/2 or as late as 67. Almost three in 10 admitted they had no idea. Still, nearly half said they expect to rely on Medicare in retirement, and that number rose to 57 percent for those over 55.

It’s not that they don’t care. Some 84 percent of the boomers felt that access to health insurance was an important factor to consider in choosing a retirement date. However, only about half that number (43 percent) thought Medicare elegibility would help determine when to stop working. A separate recent study showed many workers plan to keep working until they’re 65 mostly to get health benefits until they qualify for Medicare.

Two-thirds of the 377 boomers in the survey said they don’t know much about more complex elements of Medicare, like prescription drug coverage or Medicare Part B, and the number jumped to 72 percent for younger boomers who are farther from retirement. The boomers include 77 million Americans born between 1946 and 1964.

The lack of knowledge is another warning sign of how under-prepared boomers are for retirement. Recent surveys showed that after caring for aging parents and supporting their kids, the "sandwich generation" has little set aside for their own retirement years. Many small business owners plan to keep working indefinitely, relatively few boomers have done any serious financial planning, and the problems are even worse for families led by single parents.

"Clearly, there is much confusion and concern among baby boomers regarding their future access to Medicare," said commission president Sandy Praeger, who is the insurance commissioner for Kansas. "With growing concerns about health insurance costs and access, these aging members of our society need to be better educated about Medicare’s timing and entitlements so that they can make informed retirement decisions." 

Will It Be There?
More than four out of five boomers (82 percent) worry Medicare may not have enough money to pay for the care they need throughout their retirement.

The commission had several suggestions about health insurance for those currently planning for their retirement:

• If you plan to retire before age 65, check to see if you can qualify for COBRA, a program that may allow you to buy coverage through your employer for up to 18 months.
• If you can’t get COBRA coverage, and you have no major pre-existing conditions, consider buying a high-deductible medical plan that has low premiums but would take care of serious problems.
• Before you qualify for Medicare, consider a major medical plan that includes visits to doctors, drugs and hospital care.
• Shop around and ask questions. There are many types of plans, so choose the best one for your situation.
• Avoid fraud by using a broker and insurance plan that is licensed by your state. You can find contacts for your state on the commission’s site.
• If you’re over 65, make sure you choose the correct type of Medicare coverage. And consider buying a Medicare supplement policy, prescription drug coverage. There’s a penalty for enrolling for drug coverage later.
• Don’t confuse insurance coverage with health discount cards.
• Consider getting long-term care coverage that covers such services as in-home caregivers and assisted living centers. If you have little saved for retirement, you probably don’t need long-term care insurance.