Anyone who has been on Medicare or who has studied the program for any length of time knows that this program that is so essential to the health and well-being of millions of American seniors doesn’t cover everything. But with 10,000 baby boomers turning 65 every single day, there are well over 3.5 million people who for the first time may be making important decisions about their medical coverage right now during the closing weeks of open enrollment, which ends December 7th. For them, as well as for the adult kids too young for Medicare who are trying to help their parents choose the right coverage, the coverage gaps in Medicare might come as an unwelcome surprise.
Last week on the Kiplinger financial website, we read this helpful article written by the Kiplinger editors. This story which outlines the seven significant coverage gaps in basic Medicare may be familiar territory to you, but we suspect it will be enlightening to someone else. If you’re still navigating Medicare choices during the final days of open enrollment, or if you know someone who is, this article is worth reading and sharing. Fail to cover these gaps and you could be in for a major financial shock.
Medicare Coverage Gaps Require Careful Planning
The Kiplinger article starts with the most basic facts about Medicare. When people refer to “original” Medicare or “traditional” Medicare, the article explains, they’re talking about Parts A and B, which together cover a large portion of your medical expenses after you turn age 65. “Part A (hospital insurance) helps pay for inpatient hospital stays, stays in skilled nursing facilities, surgery, hospice care and even some home health care,” Kiplinger writes. “Part B (medical insurance) helps pay for doctors’ visits, outpatient care, some preventive services, and some medical equipment and supplies.”
Most folks can start signing up for Medicare three months before the month they turn 65, the article goes on, but that’s when the decisions start. “It’s important to understand that Medicare Part A and Part B leave some pretty significant gaps in your health-care coverage,” the article warns. It goes on to explain what isn’t covered by Medicare, and offers information about what Kiplinger calls “supplemental insurance policies and strategies that can help cover the additional costs, so you don’t end up with unexpected medical bills in retirement.”
Medicare Doesn’t Cover Prescription Drugs
This fact surprises many new enrollees. “Medicare doesn’t provide coverage for outpatient prescription drugs,” says Kiplinger. To get coverage, you’ll need a separate Part D prescription drug policy, or a Medicare Advantage plan that covers both medical and drug costs. (If you’re fortunate enough to have retiree health-care benefits, your plan might cover prescription drugs, too.)
“You can sign up for Part D or Medicare Advantage coverage when you enroll in Medicare or when you lose other drug coverage,” the article explains. During open enrollment season each fall – now through December 7th – you can also change from one Part D plan to another. Comparing plans is important because premiums, co-pays, deductibles, and covered drugs vary widely. “Compare costs and coverage for your specific medications under either a Part D or Medicare Advantage plan by using the Medicare Plan Finder,” says the article.
Medicare Doesn’t Cover Long-Term Care
As many people discover the hard way, perhaps the biggest potential expense in retirement is the cost of long-term care. According to Genworth’s definitive Cost of Care Study, the median annual cost of a private room in a nursing home was roughly $105,800 in 2020, while a room in an assisted-living facility cost $51,600. The same data showed that 44 hours per week of care from a home health aide cost $54,900.
We looked back to this 2017 article from NextAvenue and found out that the perception that Medicare covers long-term care is widespread. “Many people have misconceptions about how Medicare will help them if they need nursing home care or extended care in their homes,” said Marcy Keckler, vice president, financial advice at Ameriprise Financial. “We did research and found over half of people expect Medicare to be their primary source of health coverage in retirement, but long-term care is only covered in really limited circumstances. So, people may have an unpleasant surprise coming.”
In truth, Medicare provides very limited coverage for some skilled nursing services, especially during rehab after illness or surgery. But Medicare will not cover what’s called “custodial care” involving help with activities of daily living such as bathing, dressing, personal hygiene, functional mobility, and self-feeding. There are various long-term-care insurance products, some combined with life insurance, to help cover these costs. Medicaid and VA programs may also be available to those who meet the requirements. But don’t expect Medicare to help.
Medicare Doesn’t Cover Deductibles and Co-Pays
These “extras” can really add up. Kiplinger explains,“Medicare Part A covers hospital stays, and Part B covers doctors’ services and outpatient care. But you’re responsible for deductibles and co-payments.” Next year, for hospitalization expenses under Part A, you’re on the hook for a deductible of $1,556 before coverage kicks in. You’ll also have to pay a portion of the cost of long hospital stays: $389 per day for days 61-90 in the hospital and $778 per day after that. It doesn’t take much calculating to see what a bite that can represent.
If you’re facing long periods of hospitalization, there’s more ominous news, says Kiplinger. “Over your lifetime, Medicare will only help pay for a total of 60 days beyond the 90-day limit, called ‘lifetime reserve days,’ and thereafter you’ll pay the full hospital cost.” This may not affect many people, but it has the potential to bankrupt the unfortunate few who find themselves spending long periods in the hospital.
When it comes to doctors’ services, lab tests and x-rays, Medicare Part B covers 80 percent, and you pay 20 percent after meeting a $233 deductible in 2022. There are two basic ways to fill the coverage gap: buy a Medicare Supplement policy (often called Medigap) or buy a Medicare Advantage plan. We won’t go into the pros and cons here – we lack the space, and Rajiv has often explained his views on AgingOptions. Both are sold through private insurers.
“Medigap policies are sold by private insurers and come in 10 standardized versions that pick up where Medicare leaves off,” says Kiplinger. “Medicare Advantage plans provide both medical and drug coverage through a private insurer, and they may also provide additional coverage, such as vision and dental care. You can switch Medicare Advantage plans every year during open enrollment season.” One big difference: with Medicare plus a Medigap plan, you generally have access to a wider range of doctors. However, MA plans can offer more benefits at a lower cost.
Medicare Doesn’t Cover Most Dental Care
“Medicare doesn’t provide coverage for routine dental visits, teeth cleanings, fillings, dentures or most tooth extractions,” warns the Kiplinger report. “Some Medicare Advantage plans cover basic cleanings and X-rays, but they generally have an annual coverage cap of about $1,500.”
Two options worth considering: you can buy a separate dental insurance policy or a dental discount plan. Or you can build up money in a health savings account (HSA) before you enroll in Medicare, and use the money tax-free for medical, dental and other out-of-pocket costs at any age. Once you sign up for Medicare, the article states, you can no longer put money in an HSA.
Medicare Doesn’t Cover Routine Vision Care
“Medicare generally doesn’t cover routine eye exams or glasses (exceptions include an annual eye exam if you have diabetes or eyeglasses after having certain kinds of cataract surgery),” says the Kiplinger article. However, some Medicare Advantage plans do offer at least some vision coverage. You may also be able to buy a separate supplemental policy that provides vision care alone or includes both dental and vision care. Proceeds from an HSA – provided you already have one set up – can also go toward vision care costs.
Medicare Doesn’t Cover Hearing Aids
“Medicare doesn’t cover routine hearing exams or hearing aids, which can cost as much as $3,250 per ear,”: says Kiplinger. “But some Medicare Advantage plans cover hearing aids and fitting exams, and some discount programs provide lower-cost hearing aids. If you save money in an HSA before you enroll in Medicare, you can also use that tax-free for hearing aids and other out-of-pocket expenses.”
Bear in mind that the U.S. may be inching closer to the widespread availability of over-the-counter hearing aids. These devices might not help everyone, but they could provide a low-cost hearing solution for some.
Medicare Doesn’t Cover Medical Care Overseas
If you’re a traveler, listen up: Medicare usually doesn’t cover care you receive while traveling outside of the U.S. As the Kiplinger article explains, there are very limited exceptions – for example, if you fall ill on a cruise ship within six hours of a U.S. port.
However, if you shop carefully, you’ll find viable options. “Some Medigap plans will cover 80 percent of the cost of emergency care abroad up to a certain limit,” says the article. “Additionally, some Medicare Advantage plans cover emergency care abroad.” It might be safest to purchase a travel insurance policy that will not only cover some medical expenses while you’re outside of the U.S. but may even cover emergency medical evacuation by medical plane or helicopter, saving you tens of thousands of dollars.
How to Look Up What Is and Isn’t Covered by Medicare
The Kiplinger article ends with these helpful links.
- To look up Medicare’s coverage rules and other types of care and procedures, go to Medicare.gov/coverage and use the “Is my test, item or service covered?” tool.
- Also see What Original Medicare Covers.
- If you believe a claim was unfairly denied, see How to Appeal a Denied Medicare Claim.
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(originally reported at www.kiplinger.com)