Medicare Part A and Medicare Part B leave significant gaps in your coverage. Medicare Advantage also has its problems.
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Medicare Part A, Part B, also known by Original Medicare or Traditional Medicare, covers a significant portion of your medical expenses once you reach 65. Part A (hospital insurance), covers inpatient hospital stays, skilled nursing facility stays, surgery, hospice care, and some home healthcare. Part B (medical insurance), covers doctor’s visits, outpatient care and certain medical equipment and supplies. The majority of people can sign up for Medicare three months prior to their 65th birthday.
It is important to know that Medicare Part A, Part B and Medicare Advantage leave significant gaps in your coverage. Medicare Advantage is a Medicare supplement that aims to fill in some of these gaps.
Private plans through Medicare Advantage may offer greater benefits and lower premiums. A recent report by the Office of Inspector General revealed that Medicare Advantage beneficiaries are sometimes denied care.
We’ll take a closer look at the limitations of traditional Medicare. Also, we’ll discuss Medicare Advantage, supplemental insurance policies and other strategies that can be used to help you avoid unexpected medical expenses in retirement.
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- Medicare Doesn’t Cover Prescription Drugs
Medicare does not cover outpatient prescription drugs. However, you can purchase a Part D prescription drug plan or a Medicare Advantage plan which covers both drug and medical costs. Some retiree health-care plans also cover prescription drugs. Part D and Medicare Advantage coverage can be signed up when you enroll in Medicare, or if you lose your other drug coverage. You can also change your policies each fall during open enrollment. Use the Medicare Plan Locator to compare costs and coverage for specific medications under either a Part D plan or a Medicare Advantage plan.
- Medicare Doesn’t Cover Long-Term Care
Long-term care is one of the biggest expenses that can be incurred in retirement. According to the Genworth Cost of Care Study, a private room at a nursing home cost $105,800. A room in an assisted-living facility costs $51,600 and a 44 hour per week care package from a home health aid costs $54,900.
Medicare covers skilled nursing services, but not custodial care. This includes help with dressing, bathing, and other daily activities. These costs can be covered by long-term insurance, or a combination of long-term and life insurance policies.
An annuity can include a long-term-care rider, which may help to offset the costs of long-term healthcare.
- Medicare doesn’t cover co-pays or deductibles
Medicare Part A provides hospital care, while Part B provides outpatient and doctor services. You are responsible for co-payments and deductibles. You will need to pay a Part A-deductible of $1,556 in 2022 before coverage begins. In addition, you will have to cover a portion of the cost for long hospital stays, which is $389 per day for days between 61 and 90 and $778 thereafter. You should be aware that Medicare will not pay for more than 60 days after the 90-day limit. After that, you will have to pay the entire hospital cost.
Part B usually covers 80% of doctor’s services, lab tests, and x-rays. However, you will have to pay 20% after a $233deductible in 2022. If you do not have the retirement health insurance policy, a medigap policy (Medicare Supplement) or Medicare Advantage plan may fill in the gaps. Private insurers sell Medigap policies. There are 10 standard versions of Medigap policies that can be used to supplement Medicare. Insurers can’t refuse you or charge you more if you purchase a medigap plan within six months after signing up for Medicare Part B. For more information, visit Medicare.gov’s Choosing a Medigap policy. Medicare Advantage plans offer both drug and medical coverage through a private insurance company. They may also cover vision and dental care. During open enrollment, you can change Medicare Advantage plans each year.
- Medicare Doesn’t Cover Most Dental Care
Medicare does not cover routine dental visits, fillings, tooth cleanings, dentures, or most tooth extractions. Medicare Advantage plans may cover basic cleanings and Xrays but have an annual cap of approximately $1,500. A separate dental insurance policy, or a discount plan could provide coverage. Another option is to open a health savings account prior to enrolling in Medicare. You can use the money for any medical, dental or other out-of pocket costs at any age. However, you cannot make new HSA contributions after signing up for Medicare.
- Medicare Doesn’t Cover Routine Vision Care
Medicare doesn’t generally cover routine eye examinations or glasses. However, there are exceptions such as an annual eye exam for those with diabetes or who have had eyeglasses fitted after certain types of cataract surgery. Some Medicare Advantage plans offer vision coverage. You may also be able buy a separate policy that covers vision or both. You can save money on your health by setting aside money before you sign up for Medicare so you can use it tax-free for prescription sunglasses, glasses, and other out-of pocket costs for vision care.
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- Medicare Doesn’t Cover Hearing Aids
Medicare does not cover hearing aids or routine hearing exams. These can run up to $3,250 per ear. Some Medicare Advantage plans do cover hearing aids, fitting exams, and certain discount programs offer lower-cost hearing aids. You can use the HSA tax-free to pay for hearing aids or other out-of pocket expenses if you have saved money before you enroll in Medicare.
- Medicare Doesn’t Cover Medical Care Overseas
Medicare doesn’t usually cover medical care when you travel outside the U.S. except in very limited situations (e.g. on a cruise ship that is within six hours of an American port). Some medigap plans cover up to 80% of the cost for emergency care abroad. Some Medicare Advantage plans also cover emergency care abroad. You could also purchase travel insurance that covers medical expenses while abroad. This policy may include emergency medical evacuation which can cost thousands to fly you on a helicopter or plane.
- One Note about Medicare Advantage
Medicare Advantage might provide coverage for certain things that are not covered under traditional Medicare. As mentioned, an April report by the inspector general’s found that Medicare Advantage providers denied or paid for care that would have been offered to beneficiaries if they had chosen traditional Medicare.
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The Department of Health and Human Services Inspector general reported that Medicare Advantage insurers “often delayed or denied” patients access to services, “even though they met Medicare coverage rules.”
