Is Medicare All You Need to Cover Medical Costs in Retirement?

Medicare Part A and Part B cover a large portion of your medical costs when you turn 65 years old.  Part A is hospital insurance and helps to cover inpatient hospital stays, stays in skilled nursing facilities, surgery, hospice care and even some home health care.   

Part B is medical insurance and helps pay for doctors’ visits, outpatient care, some preventive services and some medical equipment and supplies.

As great as this sounds, both Part A and Part B leave some significant gaps in your health care coverage. To help fill those gaps, you can obtain a Medicare Advantage Plan, or Part C Plan, which includes a prescription drug plan, or Part D Plan OR a Medigap Plan with a separate Part D Plan. 

Medigap Plans have a higher monthly premium as compared to Medicare Advantage Plans, but most out of pocket costs are covered by certain Medigap Plan versus having to pay copays and deal with deductibles with a Medicare Advantage Plan. Copays and deductibles are not covered by Medicare for Medicare Advantage Plans. You will have to obtain a separate Medicare Part D Plan with a Medigap Plan, which is an additional cost over and beyond the premium for the Medigap Plan.

As you probably have already figured out, you need a Part D Plan as Medicare does not cover prescription drugs. Costs have risen quite significantly on prescription drugs over the years, which has prevented seniors from obtaining much needed prescription drugs. The Inflation Reduction Act, signed into law on August 16, 2022, has provisions which will help reduce prescription drug costs for seniors in the next several years.  

Now here is a big cost that Medicare doesn’t cover in full. That would be Long-Term Care costs. And Long-Term Care costs can be one of the largest potential expenses in retirement. Medicare does provide coverage for some skilled nursing services (Up to 100 days with co-pays after a certain number of days, and a full 3-day hospital visit is required to receive the benefit.  Sounds a little tricky, right?). Medicare also does not provide coverage for custodial care.   

You can purchase Long-Term Care insurance, and the premiums can be expensive, especially if you wait too late to obtain coverage.  Many people feel that Long-Term Care insurance is not affordable for them.  But considering the significance of the costs from a Long-Term Care event and how your retirement assets can be dramatically impacted by a Long-Term Care event, Long-Term Care insurance may be more affordable than you think.  Especially if you consider that a surviving spouse will need to live off the remaining assets after paying all the Long-Term Care expenses.  There are other options outside of insurance that may be more affordable for you to cover the costs from a Long-Term Care event. Reach out to me to learn more.

Medicare also does not cover most dental care, routine vision care, hearing aids, and chiropractic care in addition to medical care overseas.  You can obtain a Medicare Advantage Plan that covers some of these services, but you must stay in the network, and coverage can be limited even in the network.  Medigap plans do not cover any of these costs.  

How far can your retirement assets be spread to cover medical costs in retirement and still cover living expenses for you and your spouse?  Any concerns about you and your spouse not having enough in retirement assets to cover medical costs in retirement, feel free to reach out to me to further discuss options for you and your family.  

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