Americans Don’t Know Much About Medicare, Survey Finds

While 94% of Americans age 65 and older are covered by Medicare, according to the Department of Health and Human Services, there are many common misconceptions about how the program works. According to a new survey from NerdWallet, only about a third of Americans understand how prescription drug and extended benefits (vision, dental and hearing) coverage works.

Additionally, among Americans 65 and older, just around 3 in 5 (58%) realize that Medicare is run by a federal agency, and only about 1 in 3 (32%) know how coverage works when traveling abroad.

With fall open enrollment running from Oct. 15 to Dec. 7, now is the time to better understand Medicare, the federal government's health insurance program for Americans age 65 and older and some younger people with certain disabilities.

A September 2023 survey of more than 2,000 U.S. adults, conducted by The Harris Poll, looked at what Americans, including those with Medicare, believe about the Medicare system, as well as their plans for shopping for Medicare coverage in the future.

Key findings

• Medicare management isn't clear to many Americans. Around 2 in 5 (42%) Americans age 65 and older don't know that Medicare is a federally managed program, according to the survey. 

• Americans don’t know about Medicare’s coverage limits. Only a quarter (26%) of Americans younger than 65 know that Original Medicare doesn't cover vision, dental or hearing services, the survey found.

• Most people who have Medicare don't plan to shop around. Of current Medicare enrollees, just 1 in 20 (5%) say they're planning to switch their plans during this fall's open enrollment period, according to the survey. 

Common misconceptions

Misconception 1: Medicare isn't a federal program

Medicare was signed into law in 1965 by President Lyndon B. Johnson as a federal program. The original system included Parts A and B (now called "Original Medicare") and has expanded and evolved over the years. One of the things that hasn't changed — Medicare is still a program run by the federal government.

Our survey found that 42% of Americans age 65 and older don't know that Medicare is a federal program, and 62% of Americans under age 65 have the same misconception.

Misconception 2: Medicare will pay for your care in a foreign country

Medicare will pay for care in a foreign country in three specific situations. For instance, if you're driving from Alaska to the rest of the U.S. through Canada by the most direct route, and you have a medical emergency and the nearest hospital is Canadian, Medicare may kick in.

In other circumstances — let’s say you go to the U.K. and break your wrist in London — Medicare won't help with your treatment. Just 24% of respondents in our survey know that Original Medicare will not pay for medical costs incurred in foreign countries, including just about a third (32%) of those 65 and older.

Medicare Advantage plans have to cover the three situations also covered by Original Medicare (including the Canadian trip example above), but they may also include additional coverage in foreign countries.

Misconception 3: Medicare covers extended services

In our survey, just around a quarter (26%) of Americans under the age of 65 know that Original Medicare doesn't cover vision, dental or hearing services. Unsurprisingly, those 65 and older are much more familiar with the limitations of coverage and about two-thirds (66%) of those respondents got it right.

For example, Original Medicare doesn't cover routine eye exams, which the National Eye Institute recommends those older than 60 get every year or two. Medicare Advantage, on the other hand, will often cover these services.

Medicare Advantage providers are given federal funds to manage private health insurance plans (with some requirements). That means they can offer plans that cover some vision, dental and hearing services when Original Medicare cannot.

“This coverage can be quite limited, however, so buyers should make sure they understand what’s included,” says NerdWallet Medicare writer and expert Kate Ashford.

Misconception 4: Medicare enrollment is automatic

Of the misconceptions we looked into, this was one of the least prevalent, but it's also one of the most important. In our survey, 87% of Americans got this right — Medicare enrollment isn’t automatic.

Except when it is. Medicare enrollment happens automatically for some people, like those who have been collecting Social Security for at least four months before turning 65. Those individuals are automatically enrolled in Medicare Part A and Part B. Some people who get disability benefits will also be automatically enrolled in Medicare when those benefits begin or after receiving them for a fixed period of time. For instance, if you're receiving Social Security benefits, you'll be automatically enrolled in Medicare if you receive 25 months of disability benefits and are younger than 65.

For everyone else, initial Medicare enrollment takes place during a window starting three months before your 65th birthday and ending three months after the month you turn 65. That's a total of seven months — three before your birthday, the month of and three after — when you'll have a chance to sign up.

If you miss that window, well, don't miss that window. There's a penalty applied to your premiums if you miss the enrollment window (with some exceptions). Those late enrollment penalties cost more the longer you don’t sign up. More importantly, it may mean you're going without health care coverage at a time when you may most need it.

Misconception 5: Medicare Advantage programs don't usually include drug coverage

When we asked whether Medicare Advantage plans usually come with drug coverage, just 32% of Americans know that it does. That jumps to 51% when looking at those age 65 or older.

In fact, Medicare Advantage drug coverage (sometimes called MAPD for "Medicare Advantage Prescription Drug" plans) now makes up the bulk of Medicare prescription drug enrollment, according to analysis from KFF, a health policy nonprofit.

Medicare Part D prescription drug plans are especially important for Medicare enrollees to understand because each plan has a different set of drugs that it covers. This is the plan's formulary, and it defines what medications the plan will pay for. There are certain requirements set by Medicare, but your specific drugs may not be covered by every plan. Checking the formulary is an important part of picking the right plan.

Shopping around

If you want to make a change to your existing Medicare plan, you'll need to do so during an open enrollment period. Medicare has two annual open enrollment windows — in the fall and at the beginning of the year.

The fall open enrollment period, from Oct. 15 to Dec. 7, allows you to:

• Join a new or change your existing Medicare Advantage plan.

• Move from Original Medicare to a Medicare Advantage plan, or vice versa.

• Join a new drug plan or switch from your existing drug plan.

At the start of the year, the Medicare Advantage open enrollment period runs from Jan. 1 to March 31, and allows people already enrolled in Medicare Advantage to:

• Switch to a different Medicare Advantage plan.

• Move from Medicare Advantage back to Original Medicare (you can't go the other direction from Original Medicare to Medicare Advantage).

• Join a drug plan (which will also drop you from Medicare Advantage to Original Medicare).

Nerdy advice

Whether it's because of sheer complexity or general satisfaction, our survey found that just 1 in 20 (5%) Americans enrolled in Medicare are planning to switch plans this fall. And about 3 in 5 (58%) Americans age 65 and older say Medicare programs provide good value to consumers. Even those who are happy with their current plan should shop around, though.

Medicare formulary lists change from year to year, and you may find that a more suitable or cheaper plan now covers the prescriptions you use most. Conversely, you may find out that your plan is going to drop one of your prescriptions and you'll want to decide if that's reason enough to move to a different drug plan.

With Medicare Advantage, you're often limited to a network of providers, which can also change each year. So in addition to checking your drug coverage, you’ll want to make sure that your doctor participates in your plan’s network.

“The easiest way to do this is to call your providers directly and ask which Medicare Advantage plans they’ll be accepting next year,” Ashford says.

It’s also important to know that Medicare Supplement Insurance (Medigap) plans can be expensive or impossible to replace once you drop them. If you decide you want to switch back to Medigap later, you may be charged more or even denied coverage.

When planning to change plans, give yourself time to compare all the options available. You can also reach out to your state's State Health Insurance Assistance Program (SHIP), which can provide information on the programs available to you. To find details about your state, go to shiphelp.org.

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