Think you understand Medicare? 87% of beneficiaries failed this basic test

Do you know the ins and outs of your Medicare coverage? Most Medicare beneficiaries feel confident they understand their coverage, but few can accurately identify the major types of Medicare coverage.

A new eHealth survey involving more than 1,000 Americans revealed the following:

89% are confident they understand their Medicare options.
Only 13% correctly identified Original Medicare, Medicare Advantage, Medicare Supplement, and Part D.
88% don’t know Original Medicare has no annual out-of-pocket spending cap.
42% don’t know or underestimate the typical 20% coinsurance under Original Medicare.

The Annual Enrollment Period (AEP) will open soon, allowing beneficiaries to review their coverage for the upcoming year. With so many details to compare, it can be difficult to know where to start.

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“It’s clear that making Medicare coverage decisions is confusing, given enrollees must understand whether their doctors are in network, how much they might pay out of pocket for medical care, and the differences between Original Medicare, Medicare Advantage, Medicare Supplement, and Medicare Part D plans,” says Whitney Stidom, Vice President of Consumer Enablement at eHealth.

Keep reading to learn why Medicare can be so puzzling at times, and how you can prepare for the upcoming enrollment period.

Why Medicare Can Be So Confusing

Medicare isn’t the most straightforward health insurance plan, but it’s important to understand the basics so you can make the right decisions for your health and wallet.

“Many Medicare beneficiaries are making benefit decisions without fully understanding their coverage options, which could limit access to care or lead to surprise costs,” Stidom says.

The Difference Between Original Medicare and Medicare Advantage

Original Medicare (Part A and Part B) is run by the federal government and covers most medically necessary services and supplies. Medicare Advantage (Part C), by contrast, is an all-in-one alternative sold by private insurance companies.

Whether Doctors and Other Providers are In-Network

Original Medicare typically doesn’t use networks. You can generally see any doctor or healthcare facility that accepts Medicare.

Medicare Advantage has in-network providers — doctors, hospitals, and facilities — that have a signed contract with the insurance company to provide services at agreed-upon, lower rates.

Prescription Drug Coverage

Original Medicare doesn’t cover prescription medications. You’ll need to purchase a standalone Medicare Part D plan. Medicare Advantage beneficiaries typically have prescription drug coverage bundled with their plan, providing all-in-one coverage.

“Many Medicare beneficiaries are making benefit decisions without fully understanding their coverage options, which could limit access to care or lead to surprise costs.”
Whitney Stidom, Vice President of Consumer Enablement at eHealth.

Premiums, Deductibles, Copays, and Coinsurance

Health insurance has a lot of terminology that you’ll need to understand.

These include:

Premiums: Regular monthly payments you make to your Medicare plan to keep coverage active, regardless of whether you use medical services or not.
Deductibles: The yearly amount you pay out of pocket for medical services before your insurance starts to chip in.
Copays: A flat, fixed payment for a specific doctor visit or prescription drug.
Coinsurance: Your share of the total medical bill costs, calculated as a percentage, after you meet your deductible.

What Services and Supplemental Benefits a Plan Covers

Medicare Advantage may also cover supplemental benefits that Original Medicare generally doesn’t cover, such as routine vision, dental, and hearing services. Depending on the plan, these benefits may also include fitness programs, allowances for over-the-counter health items, groceries, or delivered meals.

3 Medicare Misconceptions That Could Cost You

Here are the most common misconceptions about Medicare plans that may keep you from choosing the right coverage.

1. “All Medicare Advantage Plans Are Basically the Same”

Medicare Advantage plans can differ significantly from one another. Provider networks, prescription drug coverage costs, out-of-pocket expenses, vision, dental, and hearing benefits, and other supplemental benefits can vary by plan.

As the survey revealed, 64% of Medicare Advantage beneficiaries believed these plans were generally all the same. Yet, eHealth reports that the average beneficiary has nearly 40 Medicare Advantage plans available locally.

With this in mind, it’s important not to choose a Medicare plan based solely on its name, premium, or reputation.

2. “Original Medicare Has a Yearly Out-of-Pocket Limit”

Original Medicare doesn’t have an annual out-of-pocket spending cap — and the survey revealed that 88% of beneficiaries didn’t know this.

After you meet your annual deductible, you generally pay 20% of the Medicare-approved amount for Part B services. Unlike Medicare Advantage, Original Medicare doesn’t have an annual out-of-pocket maximum. That means your 20% share can continue adding up if you need extensive medical care.

3.“My Medicare Plan Worked Last Year, So I’ll Just Renew It”

Plans, networks, prescription drug formularies, and supplemental benefits can change every year. Your circumstances can also change, like your health, medications, doctors, and finances. A plan that made sense this year may not be the best fit for 2027.

“It is important that Medicare beneficiaries don’t automatically renew a plan without first checking what’s changing or what other options may be available to them,” Stidom says.

How to Compare Medicare Plans for 2027

When comparing Medicare plans for 2027, keep the following checklist in mind:

Are your doctors, specialists, and preferred hospitals covered?
Are your medications covered, and at what cost?
What will your copays and coinsurance be when receiving medical services?
(For Medicare Advantage Plans) What will your out-of-pocket maximums be?
What supplemental benefits are included, and are there any additional costs to use them?

Stidom also recommends looking at offerings that could help reduce your budget. For example, she mentions how some Medicare Advantage plans may offer a grocery allowance to save on healthy food or telehealth services to make care more convenient.

3 Steps to Take Before Medicare’s Annual Enrollment Period

Here’s how you can prepare for Medicare enrollment later this year:

Read your annual notice of change: Medicare Advantage and Part D enrollees receive a notice in September, which explains changes to their current plan for the coming year. Review these changes before deciding whether to keep your current plan or look for a different one.
Review your current health and financial needs: Have your medications changed? Has your health changed? Are you seeing different doctors? Have your finances changed? Ask yourself these questions when choosing a new plan.
Compare your current plan with other plans: Don’t assume that staying put is the easiest or cheapest option. Take time to compare potential costs, not just the premiums.

“Savvy beneficiaries should start preparing now,” Stidom says. “While early signs suggest the Medicare market is beginning to stabilize for 2027 after several years of disruption, consumers shouldn’t assume last year’s plan is still their best option. “

Could Shopping Around Help You Save Money?

Comparing plans can reduce out-of-pocket spending while maintaining similar coverage. eHealth’s analysis found that people who comparison-shopped for 2026 Medicare Advantage plans potentially saved an average of $1,670 while maintaining similar coverage. But these savings aren’t guaranteed. Your potential savings will depend on your individual coverage needs, plan availability, and circumstances.

Could C-SNP Be Right for You?

According to Stidom, 68% of Medicare beneficiaries have at least one chronic condition. If you’re managing a chronic condition, she recommends evaluating a chronic special needs plan (C-SNP).

“These plans, which grew in enrollment by 25% this year, can help lower prescription medication costs and can offer additional benefits specifically designed for people with qualifying chronic conditions,” she says.  

In some cases, a diagnosis of a qualifying chronic condition may trigger a Special Enrollment Period, allowing someone to switch from another Medicare Advantage plan to a C-SNP.

Please note that not everyone with a chronic condition will qualify. Eligibility depends on the specific condition and plan.

The Bottom Line

Having confidence about your Medicare plan isn’t the same as understanding it. Choosing a year-long plan is a big deal, as your choices can significantly affect both access to care and out-of-pocket spending.

Before choosing coverage for 2027, take time to understand what you have, what’s changing, and what alternatives are available. Use trustworthy resources — such as Medicare.gov — or seek qualified assistance if you’re unsure how the options work.

The goal isn’t to become a Medicare expert. It’s to know enough about your coverage to recognize what you’re actually paying for and whether it meets your health needs and budget.