Millions of seniors rely on Medicare to cover their health-related needs in retirement. But confidence in the program is waning, according to a new TD Ameritrade survey. Among U.S. adults aged 45 and older with more than $250,000 in investable assets, 76% plan to rely on Medicare as their top tool for support in retirement, yet only 44% feel that Medicare will cover the bulk of their healthcare expenses during that time. The question is: Are they right?

Medicare's limitations

Though retired seniors tend to rely heavily on Medicare for healthcare coverage, there are a host of services the program actually won't pay for. Take dental services, for example. Medicare won't provide coverage for routine oral healthcare, leaving seniors to pay fully out of pocket. The only time Medicare will pick up the tab for dental services is if they're medical in nature. For example, if you fall, break your jaw, and need surgery, that service might be covered even if an oral surgeon performs the procedure.

Doctor examining older male patient.


Another key need Medicare won't cover? Hearing services. Many seniors require hearing aids as they age, but Medicare won't pay for these devices, nor will it pay for the exams that determine whether they're needed. And let's not forget vision services -- Medicare won't cover routine eye care, like prescription checks and actual eyeglasses. That said, it will cover certain eye issues that are medical in nature, like glaucoma tests and treatment for eye injuries.

You may have heard that supplemental insurance exists for seniors to cover those services that Medicare won't. Unfortunately, Medigap won't pay for dental, hearing, and vision services, either, so if that's your backup plan, you're out of luck.

A solution does exist, however, in the form of Medicare Advantage. Think of Medicare Advantage as an alternative to original Medicare, which has three distinct parts: Part A, which covers hospital care, Part B, which covers doctor visits and diagnostics, and Part D, which covers prescription drugs. Medicare Advantage, by contrast, is a single plan that's designed to cover all of your healthcare needs, and best of all, most Advantage plans will pay for dental, hearing, and vision care.

Will Medicare Advantage be cheaper than original Medicare? There's a good chance it will be, though ultimately, that will depend on the specific plan you choose. The good thing, however, is that Medicare Advantage must provide at least the same level of coverage as original Medicare, so if you sign up for it, you know you're getting at least that much.

Another benefit of Medicare Advantage is that many plans offer an annual out-of-pocket maximum, thereby giving you a degree of protection by capping your healthcare spending at a certain point. Original Medicare does no such thing. And whereas original Medicare will only pay for healthcare services within the U.S., many Advantage plans offer overseas coverage. If you're planning to travel extensively in retirement, that's certainly something to consider.

The fact that most Americans lack confidence in Medicare isn't surprising given the number of services the program won't pay for. The best way to avoid financial hardships in retirement is to know what to expect from Medicare and plan accordingly, whether by boosting your savings, buying the right supplemental insurance, or increasing your scope of coverage by opting for an Advantage plan. The more legwork you do in advance, the greater your chances of getting the health coverage you need one way or another.