Please ensure Javascript is enabled for purposes of website accessibility

60% of Gen Xers Worry Medicare Won't Cut It in Retirement. Are They Right?

By Maurie Backman – Jun 18, 2018 at 4:03AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Medicare offers a wide range of services to seniors, but is it enough?

Millions of seniors rely on Medicare to provide health coverage in retirement. But more than half of Gen Xers today aren't confident that Medicare will do the trick once they become eligible, according to new data from Ameriprise Financial. Consequently, many workers who are midway through their careers at present are worried about managing the cost of healthcare once retirement becomes their reality.

Medicare won't cover everything

Seniors can count on Medicare to cover a wide range of health services, from hospital visits to diagnostic tests. There are even a number of free services Medicare provides, such as yearly well visits and diabetes and depression screenings.

Male doctor talking to gray-haired patient


On the other hand, there's a host of health services Medicare won't cover. Take dental exams, for example. The need to care for our teeth doesn't go away as we age. Quite the contrary -- we're more likely to have dental issues when we're older, so the fact that Medicare won't pay for them is a huge problem.

Similarly, Medicare does not cover hearing aids or vision services, both of which tend to be heavily used by seniors in particular. Furthermore, Medicare won't cover nursing homes on a long-term basis; it will only cover short-term care to address a specific medical issue. And it won't cover assisted living facilities, either.

Because of these limitations, Gen Xers are correct to be wary of relying on Medicare in the future. Thankfully, there are steps they can take ahead of time to help ensure that they're adequately covered once their careers come to a close.

Easing the burden of healthcare in retirement

Healthcare is one of the most significant costs seniors face, so if you're not comfortable sitting back and depending on Medicare, what with its limitations, you'll need to take matters into your own hands. You can start by researching Medicare Advantage plans ahead of retirement to see if one makes sense for you.

Medicare Advantage plans are administered by private insurers, but with certain requirements. At a minimum, they must offer the same coverage as traditional Medicare. However, most Advantage plans offer a wide range of coverage that encompasses many of the services traditional Medicare doesn't, like dental, vision, and hearing.

The beauty of Medicare Advantage is that it caps your annual out-of-pocket spending -- something traditional Medicare doesn't do. And in some cases, you might get coverage overseas, which, if you're planning to do a lot of travel in retirement, could be a huge benefit.

Now this isn't to say that Medicare Advantage doesn't have its drawbacks. You may be limited to a narrower list of providers with an Advantage plan, and you may end up paying a higher premium than you would under original Medicare (though your total out-of-pocket costs might be lower, depending on the services you use). Still, it's an option worth looking into if the idea of potentially limitless healthcare spending in retirement rubs you the wrong way.

Another important step to take during your working years is to apply for long-term care insurance. Having a policy in place to defray the cost of services like nursing home care could be huge if your health declines when you're older, but the best time to apply for a policy is during your 50s. At that age, you're more likely to not only get approved but also snag a long-term, health-based discount on your premium costs. However, you can apply in your 60s as well, especially if your health is strong.

As a Gen Xer, you still have a good chunk of time before Medicare comes into the picture. Still, it pays to research your healthcare choices as retirement begins to draw near. If anything, it will give you the peace of mind that comes with having options -- especially ones that save you money in the long run.

The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.