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3 Reasons Medicare Coverage Isn't as Comprehensive as You Think

By Christy Bieber – Aug 10, 2020 at 9:09AM

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You need to know the truth about Medicare so you can be financially prepared.

Medicare kicks in at 65 to help cover healthcare costs as a senior. But it's not nearly as comprehensive as many people think.

In fact, far from covering all your healthcare needs, Medicare may leave you with thousands of dollars in out-of-pocket expenses. Here are three reasons why:

Doctor talking with older man.

Image source: Getty Images.

1. Medicare comes with expensive deductibles and coinsurance costs

There are different parts to Medicare. Part A covers hospital care while Part B pays for outpatient care. Each part comes with deductibles as well as some coinsurance expenses. For example:

  • Medicare Part A has a $1,408 deductible per benefit period in 2020. And if you're in the hospital more than 60 days during a benefit period, you'll owe coinsurance costs starting at $352 per day depending how long you remain in care. 
  • Medicare Part B has a $198 deductible in 2020, and you must pay coinsurance costs equaling 20% of the Medicare approved amount for medical services after your deductible is met. You'll also owe monthly premiums for Part B.

Medicare Part C, or Medicare Advantage, replaces traditional Medicare (Parts A and B) with private insurance. Coinsurance, copay, and premium costs vary by plan. And Medicare Part D, or prescription drug coverage, also offers a choice of plans with varying premiums and coverage rules. 

As you can see, though, just with Parts A and B alone, you could end up paying thousands of dollars out of pocket. That's especially true if you're hospitalized for a long time during the year or if you need a lot of expensive outpatient care. 

2. You'll face lots of coverage exclusions

If you find it troubling that you must pay substantial out-of-pocket costs for services covered by Medicare, you'll be even more upset to discover that there are some things Medicare doesn't cover at all. And many are key to staying healthy. 

For example, Medicare provides no coverage for routine dental care, eye exams, contacts, or glasses. Hearing aids are excluded, too. Seniors still need to maintain their oral health and make sure they can see and hear properly, so retirees will likely need to cover these expenses. 

3. Medicare provides no payments for long-term care in most situations

One of the biggest and costliest Medicare exclusions is long-term care insurance. Medicare will cover care in a skilled nursing facility under limited circumstances, such as after a long hospital stay when you need assistance from a medical professional to recover. But it doesn't pay for "custodial care," either at home or in a nursing home. So if you need someone to help you with routine aspects of daily living, such as getting dressed or eating or using the bathroom, you'll have to cover the costs. 

Long-term care can be very expensive, with the median monthly costs of home health aides coming in at $4,385 and a semi-private room in a nursing home costing $7,513 in 2019, according to Genworth. Since Medicare won't pay for any of this in most circumstances, you need another plan for it. 

Plan for healthcare costs while keeping Medicare's limitations in mind

Assuming Medicare will cover all your needs as a retiree is a big mistake. Before you retire, look closely at what Medicare will actually do. You can then decide just how much you need to save for healthcare costs. You can also look into Medigap or Medicare Advantage Plans or to consider long-term care insurance.

While it's never fun to think about costly health issues, understanding Medicare and preparing for your needs as a senior will help ensure you don't drain your nest egg trying to stay healthy. 

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