If you’re like most people, you start dreaming of retirement somewhere in your 40s, looking forward to the day you can leave your job and spend your time doing things you enjoy.

What most people aren’t dreaming about is how much they’ll spend on health care in retirement. If you’re in your 40s now, you’ll spend over $300,000 on health-related expenses in retirement—and $500,000 or more if you live into your 90s, according to the Urban Institute.

That’s a tough pill to swallow, especially if you have major misconceptions about Medicare. If you’re heading into retirement without planning for health expenses, you’re in for a rude awakening. Check out the questions most people get wrong when it comes to Medicare coverage.

Do I have to choose between Original Medicare and Medicare Advantage?

When you originally enroll in Medicare, you choose between two “paths”—Original Medicare (Part A and Part B) or Medicare Advantage. In a recent study, 94% of working Americans age 50 or over believed once you make your choice, you’re stuck with your plan for life.

The reality is you’re never locked into a Medicare decision you’re not happy with. When you first sign up, if you choose Medicare Advantage, you can switch to Original Medicare at any time during the first 12 months, and you won’t lose your guaranteed issue rights for a Medigap plan.

Once you’re enrolled in Medicare, you have two enrollment periods each year to make changes in your coverage. The Annual Election Period runs from October 15th to December 7th each year. During this period, you can switch from Original Medicare to Medicare Advantage (and vice versa), choose a new Medicare Advantage plan if you’re not happy with the one you have, add or drop Part D prescription drug coverage, or switch to a different Part D plan.

If you enroll in Medicare Advantage and later find that it’s not for you, you will be able to use the special Medicare Advantage Open Enrollment Period from January 1st to March 31st each year to leave the plan. You can switch between Medicare Advantage plans or drop Medicare Advantage altogether and enroll back into Original Medicare.

And if you move or your Medicare Advantage plan stops operating in your area, you have the opportunity to enroll in a new plan or return to Original Medicare, so you don’t lose coverage.

In other words, you have a lot of options when it comes to choosing the right Medicare coverage if your circumstances change or you’re not happy with your plan.

Does Medicare cover long-term care?

Medicare doesn’t cover long-term care, but 90% of Americans mistakenly believe it does. Medicare may cover short stays in a skilled nursing facility if you’ve been treated in the hospital for a serious illness or injury. It does not, however, cover any custodial care in a long-term care facility.

Medicare does not cover long-term care. Many Americans don’t realize this and do not have enough set aside to pay the full cost of long-term care out-of-pocket.

This is a potentially catastrophic mistake since 70% of seniors will need long-term care in retirement. On average, men need 2.2 years of long-term care, and women need 3.7 years. About 20% of seniors need more than 5 years of nursing-home care. When you consider a semi-private room costs about $7,000 a month, you could easily spend hundreds of thousands of dollars on long-term care.

You have a couple of options for planning for these costs: Build them into your retirement savings plan or invest in long-term care insurance. Insurance premiums can cost anywhere from $1,500 to $2,500 a year, depending on the type of coverage you choose and the age you are when you purchase the protection. However, if you’re already worried about the size of your retirement nest egg, long-term care insurance may be your best bet.

Can you enroll in Medicare as soon as you retire?

Your retirement date has nothing to do with your Medicare enrollment. Unless you have a qualifying disability, you have to wait until your 65th birthday to get Medicare coverage. If you retire at 62, you need another option for health insurance until Medicare kicks in.

It’s important to know your Medicare enrollment dates because if you don’t get covered when you’re first eligible, you could pay late enrollment penalties with your monthly premiums.

The late enrollment penalties for Part A (if you don’t qualify for premium-free Part A) and Part B are based on the amount of time you went without coverage. If you are charged a late penalty for Medicare Part A, it will eventually be removed in the future. If you owe a late enrollment penalty for Medicare Part B and Part D, you’ll pay it for the rest of your life. It can be very expensive to delay Medicare enrollment if you don’t have qualifying health insurance from another source.

Does Medigap pay all your out-of-pocket costs?

A majority of Americans believe buying a Medigap plan means paying nothing out-of-pocket for health care expenses. The truth is a bit more nuanced.

See the Medicare Supplement comparison chart here.

It’s important to note that Medigap only works with Original Medicare, so if you choose Medicare Advantage, you can’t buy a Medigap plan. Your out-of-pocket costs with Medicare Advantage depend on your plan, and there is no supplemental coverage to pay them for you.

Medigap benefits are established by the federal government, so Plan G from one company has essentially the same coverage as Plan G from another. Medigap plans cover different combinations of your Part A and Part B deductibles, copayments, and coinsurance amounts. Some even cover Part B excess charges. However, as of January 2020, new Medigap plans are prohibited from covering the Part B deductible. Medigap does not cover your Medicare premiums.

You can only use Medigap benefits for covered services under Part A and Part B. If you have a Part D prescription drug plan, Medigap won’t help with your out-of-pocket medication costs. Your plan also won’t pay for services such as routine vision and dental care that aren’t covered by Medicare.

If you’re worried about premium costs and other out-of-pocket expenses with Original Medicare or Medicare Advantage, a health savings account may be your best bet. You can contribute pre-tax dollars to an HSA, and the money grows tax-free as long as it’s invested in a qualified account. Unused contributions roll over indefinitely, and you pay no income tax on withdrawals for any purpose after age 65.

You can use the money in your HSA for qualified health expenses prior to retirement, but you can’t use it for insurance premiums or other expenses until after you retire.

Can I buy Medigap whenever I want?

Technically, you can apply for a Medigap policy whenever you want, but the company doesn’t have to sell you one unless you have guaranteed issue rights. Without guaranteed issue rights, the insurer makes you pass medical underwriting before selling you a plan; if you have anything worrisome in your health history, you could be turned down or charged a much higher premium for coverage.

Your Medigap open enrollment period is a six-month-long period based around your Part B effective date. During those six months, you can buy any Medigap plan sold in your state at the lowest available premium.

You also have a special Medigap open enrollment period if you enroll in Medicare Advantage when you first become eligible for Medicare but decide during the 12-month trial period to switch back to Original Medicare.

Outside those two periods, there are very few times when you have guaranteed issue rights for Medigap, and there is also no annual election period for Medigap when you can switch plans.

It’s very important to buy the type of coverage today you think you’ll need 10 or 20 years into retirement because you won’t be able to upgrade your plan later on if your health or financial circumstances change.

Is there an annual cap on out-of-pocket Medicare costs?

Most people believe that Medicare is more like their employer’s health coverage than it really is. If you choose Original Medicare, there is no limit to your out-of-pocket health care expenses. A Medigap plan is your only protection against catastrophic spending if you choose Part A and Part B.

However, if you choose Medicare Advantage, there is an annual out-of-pocket cap on your expenses. The federal government sets the maximum; in 2023, the Medicare Advantage maximum out-of-pocket limit is $8,300. However, individual plans can—and often do—set their limits much lower. You may have a different cap for in-network spending versus care you get outside your plan’s network.

Keep in mind, however, that your prescription drug costs don’t count toward your out-of-pocket cap. Part D has its own framework for catastrophic costs.

Does Medicare cover dental and vision services?

Original Medicare does not cover routine vision or dental care, and even if you buy a Medigap plan, you won’t have coverage for these routine services. If you wear glasses and get eye exams every year, you have to pay for them yourself.

In certain situations, Original Medicare covers some dental and vision services; if you injure your eye, for example, Medicare covers your treatment. It also pays for glaucoma screenings for high-risk individuals. If you have cataract surgery, Medicare pays for one pair of glasses or contact lenses. Outside of that, you’re mostly on your own for dental and vision exams and services.

Many Medicare Advantage plans, however, do offer coverage for routine vision, dental, and hearing services. Your plan may place an annual cap on benefits, and certain services, such as crowns or implants, may not be covered. However, Medicare Advantage plans are private insurance plans, so some plans may have more benefits than others. It pays to compare all available plans in your area before you buy to get the best one for your health needs.

Most people are happy with their Medicare coverage, but it’s important to understand your benefits and options, so you aren’t unpleasantly surprised by healthcare costs in retirement.