There are times when you might think that your health-care ­expenses are covered by Medicare—but they’re not. Or you think you’re not covered—but you are. 

That’s because Medicare is an enormously complex system of rules and exceptions that lead many people astray. And the mistakes you make could be very costly.

Tricky Medicare situations that can confuse even savvy ­participants… 

Employee, retiree or Cobra coverage may be secondary to Medicare once you turn 65—even if you don’t have Medicare. Some people do not sign up for Medicare when they turn 65 because they still have health-care coverage through an employer, former employer or union. Some of these people will learn the hard way that their employer-based plan may no longer provide adequate coverage once they turn 65. 

If you have retiree coverage or Cobra coverage—which is primarily for employees who recently lost their jobs—that coverage becomes “secondary” on your 65th birthday. The same is true if you have active-employee coverage through an employer that has fewer than 20 employees—though not if you have active employee coverage from a larger employer. “Secondary” means this insurance will pay only the portion of medical bills that is covered by this insurance after Medicare pays. If you signed up for Medicare Part A and Part B, you can draw on both plans to get full coverage. But if you have not signed up for Medicare, you’ll have to pay the portion that Medicare would have paid.

Unfortunately, people unaware of this quirk often fail to sign up for Medicare at age 65 and don’t ­realize there’s a problem until big, uncovered medical bills arrive. In fact, insurance companies sometimes initially cover these bills, then demand repayment months later—at which point the patient might have missed his/her Medicare initial enrollment window. Example: A California woman who failed to sign up for Medicare when she stopped working owed her Cobra coverage provider $150,000 after the provider realized that its coverage should have been secondary to Medicare and demanded repayment.

What to do: Consider signing up for Medicare Part A and Part B during the open-­enrollment period that falls before your 65th birthday even if you have active-employee coverage from a small employer…or retiree or Cobra coverage. 

However, if you are employed with a company that has 20 or more employees when you turn 65, it might not be worth signing up for Medicare Part B or prescription drug Part D—it may add little or nothing to your existing benefits for the premium you pay. Confirm with your employer’s benefits coordinator that the company has 20 or more employees. Large-company employees typically should sign up for Part A as age 65 nears, however. Part A does not have a monthly premium for most participants, so there usually is no downside to doing this. Potential exception: If the coverage you receive through a large employer is a high-deductible health plan and you wish to contribute to a Health Savings Account (HSA), it might be worth delaying enrollment in Part A. If you are enrolled in Medicare Part A and/or B, you are not eligible to make contributions to an HSA, though you still can spend money that you already have in an HSA.

At-home custodial care isn’t covered—unless it is. You might have heard that Medicare does not pay for “custodial care”—in-home assistance with basic life activities such as bathing, dressing and cooking. But buried in Medicare’s rules is an exception that many people miss—if you require skilled nursing service and/or skilled therapy care, such as physical therapy or speech therapy, and you cannot easily travel to medical facilities to obtain this care, then your custodial care could be covered as well. There are limits on this coverage, however, and hoops you would have to jump through to obtain it. 

What to do: If your doctor says you require skilled nursing care or skilled therapy care, explain that you are unable to travel to receive this care and ask the doctor if he/she can order home health care. If your doctor agrees to order this and that skilled care is required no more than once each day and for a finite period of time, then the part-time custodial-care services you also require could become covered as well—though only if you obtain this custodial care from a Medicare-certified home health agency. You can find these by entering your location into the “Find a Home Health Agency” tool on Medicare.gov

You might be billed for vaccinations—even though they’re covered by Medicare. Many vaccines are covered under Part D, the Medicare component that covers prescription drugs. But patients generally receive vaccinations at their doctor’s offices—and doctor’s office administrators are used to sending bills to Part B, the Medicare component that provides medical insurance. Result: Many vaccination bills are submitted for the wrong part of Medicare. When Medicare denies payment because of this mistake, these doctor’s offices often fail to notice that the problem was a billing error and bill the patient for the vaccination. Most patients pay, assuming that the vaccine must not have been covered. 

What to do: If you receive a bill from your doctor’s office and/or an “explanation of benefits” notice from Medicare informing you that a vaccination was not covered, read the notice and/or contact the doctor’s billing department to confirm that the proper Medicare component was billed. With many vaccines—including shingles, Tdap (for tetanus, diphtheria and pertussis), chicken pox and hepatitis A—Medicare Part D should have been billed. Other vaccines, including those for influenza, pneumonia and hepatitis B, are covered by Part B. COVID-19, which is already covered for testing under Part B, will presumably be covered for a vaccine under Part B once one becomes available. If you discover that a vaccination was misbilled, instruct the billing department to resubmit its request for payment to the proper Medicare component. If the ­billing department drags its heels, contact your Part D plan and ask how to submit a claim for reimbursement if you must pay the bill out of pocket. 

You also could remind your doctor’s office that Part D should be billed when you receive a Part D–covered vaccine, but don’t be surprised if this fails to prevent the problem. The person who does the billing for the office might not be the person you spoke with. 

A hidden hospital decision might mean that your stay in a skilled ­nursing facility is not covered. Medicare typically fully covers the cost of a stay in a skilled nursing facility for up to 20 days (and partially covers up to an additional 80 days) as long as this stay follows a hospital stay of three days or longer. But perplexingly, not every stay in a hospital counts as a hospital stay. Sometimes hospitals assign patients rooms but give them “observation” status rather than officially admitting them. This generally happens to patients who initially receive treatment in the emergency room but then are advised to remain in the hospital. Hospitals often fail to make it clear to these patients that they have not officially been admitted—and even when they do, patients rarely realize the financial consequences of this decision. If a patient is not officially admitted, Medicare will not pay for a subsequent stay in a skilled nursing facility. The same is true if a patient was initially given observation status and later switched to inpatient status, if that changing status means that total inpatient time was less than the required three days. Additionally, observation status can lead to higher out-of-pocket costs for the hospital stay itself, because it means bills are paid by Medicare Part B, which typically has higher coinsurance payments than Part A. 

What to do: If you are advised to stay overnight in the hospital after initially visiting the emergency room, ask the doctor providing treatment (or another hospital employee) whether you are being admitted or instead you are under observation status. If the answer is observation, ask how you can appeal this decision—the hospital should have a process for ­doing so.