Medicare Part A and Part B, aka Original Medicare or traditional Medicare, cover most medical expenses once you reach age 65.
Most people can begin signing up for Medicare three months before they turn 65. It is essential to realize that Medicare Part A and Part B leave a few substantial gaps in your healthcare coverage.
A private plan via Medicare Advantage may offer more significant benefits and lower premiums. But a recent Office of Inspector General report found that some Medicare Advantage beneficiaries were denied needed care.
Here’s a closer look at what is not covered under traditional Medicare insurance, along with information on supplemental insurance policies, Medicare Advantage, and strategies that may help you pay for extra costs, so you do not wind up with surprise medical bills at retirement.
Medicare Doesn’t Cover Prescription Drugs.
Medicare insurance doesn’t cover prescription drugs out-of-hospital, but you can purchase a standalone prescription drug policy under Part D or a Medicare Advantage plan that covers your health care costs and medications.
You can enroll in Part D or Medicare Advantage coverage when you join Medicare or lose your other drug coverage. And you can switch policies in the fall each year during open enrollment.
Medicare Doesn’t Cover Long-Term Care.
One of the most significant potential retirement expenses is the cost of long-term care. The average private room cost about $105,800 in a retirement community in 2020, according to Genworth’s cost-of-care study; an assisted-living facility room costs $51,600, while a 44-hour-per-week home health care assistant costs $54,900.
Medicare insurance agency covers certain skilled nursing services, but it does not cover personal care, such as assistance with bathing, dressing, and other activities of daily living. , But you may be able to purchase long-term care insurance or a coordinated long-term care and life insurance policy to help you pay these costs. You also could get a long-term-care rider on your annuity, which can help offset long-term-care costs.
Medicare Doesn’t Cover Deductibles and Copays.
Medicare Part A covers hospital stays, while Part B covers physician services and outpatient care. But you are responsible for deductibles and copays. In 2022, you would pay a $1,556 Part A deductible before insurance kicked in, and you would also be expected to cover some costs of extended stays in hospital: $389 a day for days 61-90 of a visit, $778 per day after that. Beware: Over the course of your life, Medicare will help cover just a total of 60 days beyond your 90-day limit, called “lifetime reserve days,” and you will pay the total cost of your stay after that.
Part B generally covers 80% of physician services, lab tests, and X-rays, but after the $233 deductible, you will be expected to pay 20% of costs in 2022. A Medigap (Medicare-insurance-complementary) policy or a Medicare Advantage plan could fill in the gaps if you don’t have the additional coverage of your retirement health plan. Private insurance companies sell Medigap policies, which come in 10 standardized versions that fill the gaps left by Medicare.
Medicare Doesn’t Cover Most Dental Care.
Medicare does not cover regular dental visits, cleanings, fillings, dentures, or most dental extractions. Some Medicare Advantage plans cover basic cleanings and X-rays but generally have an annual coverage limit of around $1,500.
You may also obtain coverage through an individual dental insurance policy or dental discount plan.
Medicare Doesn’t Cover Routine Vision Care.
Medicare typically does not cover routine eye exams or glasses (exceptions include annual eye exams if you have diabetes or drinks after you get some cataract surgery). But some Medicare Advantage plans provide vision coverage, or you can purchase a supplemental policy that only provides vision coverage or includes dental and vision.
Medicare Doesn’t Cover Hearing Aids.
Medicare does not cover routine hearing exams or hearing aids, which can cost up to $3,250 per ear. But some Medicare Advantage plans cover hearing aids and hearing-aid fits, and some discount programs offer lower-cost hearing aids. If you saved in an HSA before you entered Medicare, you could use it, tax-free, to pay for hearing aids and other out-of-pocket expenses, too.
Medicare Doesn’t Cover Medical Care Overseas.
Medicare insurance agent generally does not cover the care you get when traveling outside the United States, except in minimal circumstances (such as cruising on a ship within six hours of a U.S. port). But some Medigap plans cover 80% of emergency care costs overseas, up to a specific limit.