If you're new to Medicare, or are planning to enroll in the near future, it's imperative that you understand how the program works and what it costs. For example, some people incorrectly believe that Medicare is free, when, in fact, it's only Part A, which covers hospital care, that doesn't charge participants a premium.

Not only is Medicare not free, but your out-of-pocket healthcare costs in retirement could wind up being far more substantial than you'd think due to the number of services Medicare doesn't cover. For instance, dental exams aren't picked up by Medicare, and neither are vision services or hearing aids. But if there's one major non-Medicare-covered expense you really need to watch out for, it's none other than long-term care.

Young man in scrubs leaning over toward older man with meal in front of him

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What will long-term care cost you?

Many people assume that Medicare will cover the cost of nursing homes or assisted living facilities, but it won't. While the program will pay for a limited stay in a skilled nursing facility, it will only do so if your condition is expected to improve and is related to a medical issue or injury.

However, Medicare won't pay for what's known as custodial care -- help you need to function. For example, many people wind up in nursing homes or assisted living facilities not because they're ill or injured, but because their bodies no longer function the way they used to, and their mobility is therefore limited. That's where long-term care comes in, and it's an expense you'll generally need to face without any help from Medicare.

Unfortunately, it can be an astronomical one at that. The average annual cost of an assisted living facility is $48,000 on a national level, according to Genworth's 2018 Cost of Care Survey. Meanwhile, the average national price tag for a shared room in a nursing home is $89,297 a year. And for a private nursing home room, it's $100,375.

Home health aides, which Medicare also won't cover if they're needed for custodial care purposes, can be a fortune, too. The average yearly cost of a full-time home health aide is $50,336.

That's why it's crucial that you plan for the enormous expense that is long-term care. Though it's impossible to predict whether you'll need that care or to what extent, you're far better off being safe than sorry -- especially since Medicare can't bail you out.

Planning for long-term care

If the thought of paying for long-term care is enough to send your stress levels through the roof, then it's imperative that you come up with a plan for addressing that need. Your best bet in this regard is to purchase a long-term care insurance policy, and the best time to apply for one is during your mid-50s. At that age, you're not only more likely to get approved, but you might snag a health-based discount on your premiums, thereby making your policy more affordable.

At the same time, it pays to boost your savings so that you have funds available to cover long-term care down the line. In this regard, you have several options. You could ramp up your contributions to your general retirement savings plan, whether it's an IRA or a 401(k), or you could fund a health savings account (HSA). The latter hinges on eligibility -- to qualify, you must have a high-deductible health insurance plan and meet other requirements. But if you grow enough savings in an HSA, you'll have a dedicated source of funds earmarked for healthcare expenses in retirement, long-term care included.

Though Medicare provides a host of key health benefits for seniors, it won't foot the bill when it comes to long-term care. Planning ahead for that expense could save you a world of financial stress and upheaval should the need for it arise at any point during your golden years.