Many seniors retire with decent-sized nest eggs only to find that their money starts to disappear on them at a faster rate than expected. And in some cases, a big reason boils down to healthcare.
Healthcare is an unquestionably large expense for retirees, and it has the potential to put a lot of people in a tough financial spot. And part of the problem is that Medicare has a tendency to come with hidden costs that seniors aren't prepared for. Here are a few such gotchas that might cause you a world of financial stress.
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1. There's no coverage for dental or vision services
Medicare will pay for a wide range of treatments, diagnostic tests, and preventive services, including screenings and vaccines. But one thing Medicare won't pay for is dental care. And it won't pay for vision services, either.
This can be problematic, though, because seniors clearly need to stick to a regular dental visit routine to maintain good oral health. And vision problems can arise at any age, so it's important that seniors make sure they're following up in that regard, too. An incorrect prescription could increase the risk of falling or getting injured.
Now seniors who enroll in original Medicare, as opposed to Medicare Advantage, are often urged to sign up for supplemental insurance (Medigap) so they're protected against certain out-of-pocket costs. But a Medigap policy won't step in to cover services original Medicare won't. So for things like dental care and eye exams, the best bet is really to just save extra money ahead of retirement to allow for those costs, whether in a regular retirement account or an HSA.
2. Your deductible only covers 60 days of a hospital stay
When you're admitted to the hospital under Medicare, there's a deductible you have to pay per stay. Right now, it's $1,600, but in 2024, it's rising to $1,632.
Clearly, that deductible is expensive enough in its own right. But unfortunately, it only covers 60 days of hospital care. If you need to stay beyond 60 days, you'll have to pay a daily coinsurance rate of $400 ($408 in 2024).
Thankfully, this is a situation where a Medigap plan could come to your rescue by helping to defray those costs. So make sure to sign up for Medigap if you know you'll be sticking with original Medicare. (Medigap is not compatible with Medicare Advantage plans.)
3. A late enrollment could cost you more for life
You're allowed to enroll in Medicare starting three months before the month you turn 65. And your initial enrollment window closes three months after that month.
If you delay your Medicare enrollment, you'll face lifelong surcharges on your Part B premiums. And the cost there can really add up.
Now there is an exception for people who are covered by a group health plan at the time of their initial Medicare enrollment period. But you'll need to make sure that exception applies to you, and that the plan you're enrolled in qualifies. If not, you could end up shelling out a lot more money for Medicare coverage all in.
Medicare is an important program that millions of seniors rely on. But it's far from perfect. Read up on the costs you might face under Medicare so you can prepare accordingly and avoid a financial crunch during retirement.
