Navigating Medicare’s Coverage Gaps

Medicare can be a valuable asset even for wealthy households: The government insurance program covers up to 80% of eligible expenses. But while basic Medicare covers things like doctor visits and in-hospital care, there are many gaps in coverage that need to be filled. Doing so can help your financial plan withstand expensive, unanticipated medical crises.

What Medicare Covers

“Original” Medicare consists of Part A and Part B. Part A covers stays in hospitals and skilled nursing facilities, as well as hospice care and some home health care services. Part A generally does not require a monthly premium if the beneficiary or their spouse has paid Medicare taxes while working. Part B covers outpatient services and medically necessary services. It includes doctor visits, preventive services like vaccinations and screenings, lab tests, medical equipment and some home health care services. Unlike Part A, it requires a monthly premium, typically based on the individual’s income. But original Medicare is full of coverage gaps: It doesn’t pay for prescription drugs, dental, vision and hearing care, for example. The good news is that there are solid options for filling those gaps.

Prescription Drugs

Once you’re enrolled in Medicare Part A, Part B or both, you’re eligible for Medicare Part D. Part D plans are stand-alone prescription drug plans offered by private insurance companies that have been approved by Medicare. Once the deductible is met, copayments or coinsurance on drug purchases are typical. Those who can afford premium Part D plans should shop around. While no plan eliminates cost sharing completely, some have more generous coverage, lower out-of-pocket costs or both. Another option to get prescription drug coverage is to enroll in a Medicare Advantage plan, also known as Part C. These plans provide all-in-one coverage for medical and prescription drug services.

Dental Care

Medicare Parts A and B do not provide coverage for most routine dental care such as checkups, cleanings, fillings, tooth extractions, dentures and other procedures not directly related to a covered medical condition. The most common option for closing this gap is to purchase a stand-alone dental insurance plan. Alternately, some Medicare Advantage plans do include dental coverage, albeit with annual coverage caps.

Eye and Vision Care

Parts A and B do cover certain types of eye care related to medical procedures. These include cataract surgery and eyeglasses or contacts after cataract surgery. Glaucoma tests are covered, as are tests for diabetic retinopathy, a common diabetes complication that affects the eyes. But original Medicare does not cover routine eye exams or eyeglasses unless they are medically necessary. Medicare Advantage plans may include additional vision care coverage, and some cover routine eye exams and eyeglasses. Another option is to buy a stand-alone vision insurance plan.

Hearing Aids

Original Medicare generally covers hearing-related costs only under certain circumstances, such as medically necessary treatments or diagnostic services ordered by a physician. Routine hearing exams and hearing aids are typically not covered. Most Medicare Advantage plans do cover hearing exams and hearing aids, but the coverage varies significantly by plan. Bear in mind that vision and hearing care, as well as other out-of-pocket health care expenses, can be paid for out of pocket using health savings accounts, which offer tax advantages.

Long-Term Care 

Medicare may cover short-term skilled nursing care, like after a hospital stay, but only under specific conditions and for a limited time. And it typically does not cover the cost of long-term care, such as assistance with daily living activities provided in nursing homes, assisted living facilities or through home care services. For long-term care needs, individuals should consider private long-term care insurance or self-pay options. It’s important to take long-term care planning seriously: A 65-year-old today has a nearly seven-in-10 chance of needing long-term care services during their lifetime. And it can be quite costly. For example, the national median cost of a private room in a nursing home is $297 per day.¹

Overseas Medical Care

Medicare’s coverage outside the United States is extremely limited, and that presents an obstacle for travel-minded retirees. If you are planning to travel overseas and want medical coverage, it may be wise to purchase a travel health insurance policy. Single-trip insurance, multi- and annual-trip insurance and other options are available.

Expert Help Is Available

Medicare is complex. Your Mariner AdvicePeriod wealth team can help you maximize your benefits, minimize tax implications and protect your assets from unexpected medical expenses, all in coordination with your retirement strategy.