Medicare open enrollment is from October 15th to December 7th. So if you need to make any changes to your coverage, now is the time to do it.
If you’re enrolling in Medicare for the first time, you may be under the impression that it will cover all your costs, but unfortunately, it’s not that simple.
Below is a crash course on the different types of Medicare coverage and how each works. And, as a bonus, 7 unexpected costs that Medicare doesn’t cover and how you can proactively plan for them.
Medicare Coverage Options
There are two main ways to get Medicare coverage — Original Medicare (Parts A+B) or a Medicare Advantage Plan (Part C).
Original Medicare has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance). Once you pay your deductible, Medicare pays its share of the approved amount, and you pay your share through coinsurance and deductibles.
Traditional Medicare costs an average of $170 per month (or higher, depending on your income). It’s often more affordable and popular than Medicare Advantage, though it leaves notable coverage gaps.
Medicare Advantage (also called Part C) is a type of Medicare health plan offered by a private company that contracts with Medicare. Part C plans still include Part A and Part B. But unlike Original Medicare, they may provide extra benefits such as Part D (Prescription Drug Coverage), vision exams, dental coverage, hearing aids, and more.
You can choose your Medicare coverage when you first enroll or during open enrollment. Compare your coverage options here.
What Medicare Does Cover
Now that you know the two main plans let’s break down what they cover.
Part A: Basic Hospitalization
Medicare Part A is essentially hospital insurance. It covers inpatient hospital care, skilled nursing facility care (except long-term care), hospice, lab tests, surgery, home health care, and devices like blood sugar meters and test strips.
Part B: Outpatient Care
This is the medical insurance portion of Medicare. Part B covers outpatient services like primary doctor visits, in-network specialists (like neurology or cardiology physicians), preventative services, and diagnostic tests.
Key Benefits of Original Medicare:
- You can visit any doctor or hospital that takes Medicare anywhere in the U.S.
- You don’t need a referral to see a specialist (in most cases)
- It covers most “medically necessary” services and supplies
Part C: Medicare Advantage
Also called Part C or MA Plans, Medicare Advantage Plans are similar to Original Medicare.
Advantage Plans offer Part A and Part B benefits and provide additional coverage for care that Original Medicare doesn’t include. With additional coverage, it’s no surprise that over 45% of the Medicare population have Part C.
But this extra coverage comes with a cost. Part C enrollees spend an average of $33 more per month than their Original Medicare counterparts.
Key Benefits of Medicare Advantage:
- Consolidate medical insurance needs under one plan
- Usually offers extra benefits like vision, hearing, dental services, and Part D, prescription drug coverage.
- Still provides Medicare Part A and Part B coverage
Part D: Prescription Drug Coverage
If you’ve wondered where prescription drugs come in, you’ve made it. Part D is separate from Original Medicare unless you have it within an advantage plan (Part C).
Each plan has its own formulary (list of covered drugs). But don’t worry; all Part D plans cover an extensive range of prescription drugs that numerous individuals with Medicare take, like drugs to treat cancer or HIV/AIDS.
Check out the complete list of covered drugs.
Is your drug missing from the list? File a formulary exception by having your doctor or other prescriber provide a supporting statement explaining the medical reason for the RX need.
Still have questions about Medicare coverage? Find out if your plan covers a specific test, item, or service you need by searching here.
7 Things Original Medicare Doesn’t Cover
As you may begin to notice, Original Medicare doesn’t cover all your medical needs. If you require services that aren’t covered, you’ll have to pay for them out of pocket or through another plan.
Let’s look at some unexpected care items that Original Medicare won’t help you pay for.
1. Dental Care
You’ve probably gotten used to the dentist at least twice a year for preventative cleanings and x-rays. But Original Medicare doesn’t cover those costs or other routine dental procedures like cavity fillings, crowns, implants, etc. Usually, you have to purchase a separate, independent policy for dental coverage (unless you have it via a Medicare Advantage Plan).
2. Vision Care
Like with dental, Original Medicare didn’t build eye exams and other vision care into its lineup, meaning you’ll need a separate vision policy if you wear contacts or glasses. But Medicare may cover certain vision costs, like cataract surgery or routine eye exams if you have diabetes.
3. Hearing Aids
Original Medicare doesn’t cover hearing aids or exams for fitting hearing aids— but Medicare Advantage does. About 88% of Medicare Advantage plans cover hearing exams and hearing aids.
To increase access to hearing aids and mitigate the cost, the FDA recently approved a new category of over-the-counter hearing aids that people could get without an exam, prescription, or professional fitting. This new law aims to make hearing aids more accessible and ultimately reduce the price of this in-demand medical device.
4. Cosmetic Surgery
Medicare doesn’t cover most cosmetic surgeries. There is an exception if you need a procedure because of accidental injury or to improve the function of a malformed body part.
For example, Medicare does cover breast prostheses for breast reconstruction, but only if you had a mastectomy because of breast cancer.
5. Chiropractic Services
Typically, Medicare won’t help you pay for chiropractic services and acupuncture treatments.
However, there are a few exceptions. Medicare will cover acupuncture if it is for the treatment of chronic low back pain. It also covers chiropractic manipulation of the spine to correct subluxation (a slight misalignment of the vertebrae).
6. Medical Care Overseas
Before taking your exciting trip abroad, don’t forget to ensure you have adequate health insurance.
Original Medicare rarely covers health care while you’re traveling outside the U.S. But it does offer a few types of overseas coverage in rare cases. You may have minimal coverage if you have a Medigap/Supplement plan (discussed below). Keep in mind that most plans offer some emergency coverage while you’re abroad, though it’s likely small.
If you’re looking for additional protection, consider purchasing travel/trip insurance. Should you have a travel-specific credit card, that institution may also provide a benefit like this, so review your available benefits.
7. Long-Term Care
Long-term care, such as in-home personal care assistance, is likely the most expensive item that Medicare doesn’t cover.
With around 70% of people age 65 and older needing some long-term care during their lifetime, it’s more important than ever to plan ahead.
You can pay for your long-term care needs through:
- Long-Term Care Insurance (LTC): These premiums depend on your age, gender, and the type of plan and carrier you choose. Most experts recommend signing on to a long-term care policy in your mid-50s to mid-60s to avoid steep premiums.
- Personal Resources: You can use your personal money and savings to pay for in-home or nursing home care.
You may be able to use Medicaid as a long-term care resource. But that’s often usually after you’ve exhausted most of your assets.
How To Pay for Treatment That’s Outside Medicare’s Scope
Medical coverage in retirement can be expensive, even when you have insurance. Here are some additional ways to help you pay for gaps in your Medicare coverage.
Supplemental Private Insurance
If you’re looking for support in areas original Medicare doesn’t touch, consider getting a Medicare Supplement Insurance (Medigap) policy. Private insurance companies sell Medigap policies to help fill in the gaps from Original Medicare, just like their name implies.
How do supplement policies differ from Advantage plans? Here are a few things to keep in mind:
- Supplement plans tend to be more expensive, but they are also more flexible, allowing you to receive care from any medical institution that accepts Medicare regardless of location or zip code.
- Most Medigap plans don’t come with Part D, so you’ll need to enroll in that separately.
- While you can only make changes to your Advantage plan during open enrollment, you can alter your Medigap coverage anytime during the year.
Alternatively, you can retain coverage from a former employer or union if available.
Health Savings Account (HSA)
A health savings account lets you put aside pre-tax money that you can use later to pay for qualified medical expenses (copays, prescriptions, surgeries, etc.).
You can use HSA funds you’ve built up over time for out-of-pocket Medicare costs. Since your HSA rolls over annually, you don’t have to use the money within a set time frame like a flexible spending account.
Plan For Extra Out-of-Pocket Expenses
Remember, even with insurance, you’ll still have to budget for more regular out-of-pocket costs, like
- Co-payments: fixed, out-of-pocket expenses that you have to pay for each medical service/ item (ex: $40 for an urgent care visit).
- Co-insurance: The percentage of the care cost that you are responsible for. In Part B, you generally pay 20% of the cost for each Medicare-covered service, while Medicare covers the remaining 80%.
- Deductibles: The amount you have to pay for covered services and items each year before Medicare or your plan starts to pay (ex: $233 for Part B in 2022).
Don’t Go Without Coverage
The most important way to protect your health and finances is by planning.
Start by factoring medical insurance into your retirement budget—about 15%. But that could be more if you have an underlying health problem or require additional medical expenses. If you do spend more on medical care in a year, you may be able to write it off (if costs exceed 7.5% of your adjusted gross income).
Digging through lengthy medical jargon, tiny fonts, and confusing coverage stipulations can quickly become a frustrating and overwhelming process.
Make Medicare “Easy” Again
Make Medicare easy by contacting a financial professional. Our fiduciary advisors at Goepper Burkhardt Wealth Management have years of experience helping retirees plan for a financially successful future.
We’re ready to help you maximize your Medicare options, bring clarity to your coverage, and leave you confident this Medicare open enrollment season.
Reach out to us anytime to get started.