3 Hidden Medicare Costs That Can Break Your Retirement Budget — and How To Avoid Them
Written by
Laura Bogart
Edited by
Kristen Mae
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Ah, retirement. You’ve hoisted your sails, and you’re gliding so close to that golden horizon, you can practically feel the warmth on your face. Just as any good ship captain plots their course wisely, using wind patterns and nautical charts, you’ve been building a budget for your retirement. You’ve got everything down perfectly. Or so you think — until you hit a random chunk of debris in the water.
Even the savviest planner can find their retirement plans run aground by a sudden expense related to Medicare. No matter how well you’ve charted your course, unforeseen costs can ram you right off of it. So what do you do? You keep planning, as well as you can, by learning more about the potential Medicare costs that could blow your budget off track.
1. Out-of-Pocket Expenses
Of course, you’re gratified to know that Medicare covers a lot. But it doesn’t cover everything. You could easily find yourself balancing co-payments, coinsurance, and deductibles that will need to come straight out of your pocket. Did you know that if you’re hospitalized, you might need to pony up a Part A deductible for each benefit period? It’s true.
With Medicare Part B, after you’ve met the deductible, you could still be responsible for paying a percentage of coinsurance for common services like doctor visits, outpatient hospital care, or even the use of certain medical equipment. While Medicare Part D can help make your prescriptions more affordable, the costs of drugs can rack up quickly, especially if you need a specialty medication.
So how do you plan to pay out of pocket? You can use Medigap to cover the gap. Purchasing a Medicare Supplement Plan, or Medigap, can help you cover some of these costs, like co-payments, coinsurance and deductibles. Conversely, you can also opt for a Medicare Advantage Plan (Part C) to get additional coverage for prescription drug coverage and lower your out-of-pocket costs.
You’ll want to chat more with your financial advisor — and do an honest inventory of your anticipated health needs — to decide how you can effectively plan ahead.
2. Long-Term Care
Ideally, you’ll spend your retirement years in the comfort of home, or even on the open road (who’s to say your idea of retirement bliss doesn’t involve a road trip in a tricked-out RV?). Unfortunately, life doesn’t always work out the way you’d hope, and you could end up needing to spend time in a long-term care facility.
Given how common this experience is among retired people, you might think that Medicare covers it completely. However, you’d be wrong. Unless it’s part of a short-term treatment plan post-hospitalization, Medicare doesn’t generally cover things like stays in assisted living facilities or nursing homes, or even in-home care.
Your best option could be purchasing long-term care insurance or opening a high-interest savings account devoted expressly to saving for the costs associated with assisted living or moving into a nursing home. If you’re encountering financial hardship when long-term care becomes necessary, you can also look into your Medicaid eligibility.
3. Dental, Vision and Hearing Care
Should you stroll into your dentist or optometrist’s office expecting Medicare to cover your visit, you might have another thing coming. Ditto for the audiologist. To your surprise, you’ll learn that Medicare doesn’t cover routine dental care, routine eye exams, glasses or hearing aids — though you won’t be surprised to find that they’re all expensive.
To avoid getting caught flat-footed and with empty pockets, you should investigate dental and vision insurance plans that you can add to Medicare or opt for a Medicare Advantage Plan that offers additional benefits for dental, vision and hearing.
More From GOBankingRates
