By Kimberly Lankford, Contributing Editor | May
23, 2018
Medicare Part A and Part B, also known as
Original Medicare or Traditional Medicare, 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. 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.
It's important to understand that Medicare
Part A and Part B leave some pretty significant gaps in your health-care
coverage. Here's a closer look at what isn't covered by Medicare, plus
information about supplemental insurance policies and strategies that can help
cover the additional costs, so you don't end up with unexpected medical bills
in retirement.
Prescription Drugs
Medicare doesn’t provide coverage for outpatient
prescription drugs, but you can buy a separate Part D prescription-drug policy
that does, or a Medicare Advantage plan that covers both medical and drug
costs. (Some retiree health-care policies 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. And you can change policies
during open enrollment season each fall. Compare costs and coverage for your
specific medications under either a Part D or Medicare Advantage plan by using
the Medicare Plan Finder.
Also read 5 Ways to Save on Prescriptions for
more ideas.
Long-Term Care
One of the largest potential expenses in
retirement is the cost of long-term care. The median cost of a private room in
a nursing home was nearly $97,500 in 2017, according to the Genworth Cost of Care Study;
a room in an assisted-living facility cost $45,000, and 44 hours per week of
care from a home health aide cost $49,000. Medicare provides coverage for some
skilled nursing services but not for custodial care, such as help with bathing,
dressing and other activities of daily living. But you can buy long-term-care
insurance or a combination long-term-care and life insurance policy to cover
these costs. See The Long-Term-Care Insurance
Dilemma for more information about long-term-care insurance
and other ways to cover these costs. See Medicare Rules for Home Health
Care for information about Medicare’s strict rules for
covering home health care.
Deductibles and Co-Pays
Medicare Part A covers hospital stays, and Part
B covers doctors’ services and outpatient care. But you’re responsible for
deductibles and co-payments. In 2018, you’ll have to pay a Part A deductible of
$1,340 before coverage kicks in, and you’ll also have to pay a portion of the
cost of long hospital stays -- $335 per day for days 61-90 in the hospital and
$670 per day after that. Be aware: 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.
Part B typically covers 80% of doctors’
services, lab tests and x-rays, but you’ll have to pay 20% of the costs after a
$183 deductible in 2018. A medigap (Medicare supplement) policy or Medicare
Advantage plan can fill in the gaps if you don’t have the supplemental coverage
from a retiree health insurance policy. Medigap policies are sold by private
insurers and come in 10 standardized versions that pick up where Medicare
leaves off. If you buy a medigap policy within six months of signing up for
Medicare Part B, then insurers can’t reject you or charge more because of
preexisting conditions. See Choosing a Medigap Policy at
Medicare.gov for more information. 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. For more information,
see What Retirees Must Know About
Medicare Advantage Plans. Also see How to Fill Medicare Coverage
Gaps.
Most Dental Care
Medicare doesn’t provide coverage for routine
dental visits, teeth cleanings, fillings, dentures or most tooth extractions.
Some Medicare Advantage plans cover basic cleanings and x-rays, but they
generally have an annual coverage cap of about $1,500. You could also get
coverage from a separate dental insurance policy or a dental discount plan. See Retirees, Create a Plan to Pay
for Dental Care for more information about your options.
Another alternative is to build up money in a health savings account before you
enroll in Medicare; you can use the money tax-free for medical, dental and
other out-of-pocket costs at any age (you can’t make new contributions to an
HSA after you sign up for Medicare).
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). But some Medicare
Advantage plans provide vision coverage, or you may be able to buy a separate
supplemental policy that provides vision care alone or includes both dental and
vision care. If you set aside money in a health savings account before you
enroll in Medicare, you can use the money tax-free at any age for glasses, contact
lenses, prescription sunglasses and other out-of-pocket costs for vision care.
Hearing Aids
Medicare doesn’t cover routine hearing exams or
hearing aids, which can cost as much as $3,000 per ear. But some Medicare
Advantage plans cover hearing aids and fitting exams, and some discount
programs provide lower-cost hearing aids. For more information, see Medicare Doesn’t Cover Hearing
Aids But Retirees Have Options. 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.
Medical Care Overseas
Medicare usually doesn’t cover care you receive
while traveling outside of the U.S., except for very limited circumstances
(such as on a cruise ship within six hours of a U.S. port). But medigap plans C
through G, M and N cover 80% of the cost of emergency care abroad, with a
lifetime limit of $50,000. Some Medicare Advantage plans cover emergency care
abroad. Or you could buy a travel insurance policy that covers some medical
expenses while you’re outside of the U.S. and may even cover emergency medical
evacuation, which can otherwise cost tens of thousands of dollars to transport
you aboard a medical plane or helicopter. For more information see Going Abroad? Check Your Health
Coverage.
How to Look Up What Is and Isn't Covered by Medicare
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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