When it comes to budgeting for retirement, well-prepared pre-retirees will need to evaluate how their future income and expenses may change in retirement to be financially prepared to leave the workforce and enjoy their golden years. For most individuals, Medicare and supplemental Medigap plans will be a part of the healthcare piece of this puzzle; however, all too often, new enrollees are surprised to find that many of the expenses they expected would be covered are not. And with the average couple over age 65 spending an estimated $280,000 on healthcare during retirement, these aren’t expenses to be brushed off.
Luckily, supplemental plans are available to purchase for retirees who have more extensive healthcare needs than basic Medicare coverage will provide, but the plans vary and should be considered in their entirety before purchase. Before you shop for a Medicare plan, it’s best to do your research to find out what’s covered and what’s not. With this in mind, we’ve compiled this list of expenses that are not covered under Original Medicare in order to help you prepare for the most common budget-busting healthcare expenses.
1. Long-Term Care
Long-term care costs can be one of the most overlooked aspects of retirement planning, but can provide the most needed benefits for many individuals. In fact, the U.S. government estimates that nearly 70% of Americans over age 65 will require some form of long-term care in their lifetime, 40% over age 65 will go into a nursing home, and 10% will remain there for five years or longer.
Many people mistakenly believe that Medicare will cover long-term care services; however, Medicare Part A will only cover portions of hospital care and Medicare-approved Skilled Nursing Facility Care (SNF) for a limited amount of time (no longer than 100 days) and only when certain conditions and prerequisites are met. This very limited coverage does not cover non-skilled assistance with daily living activities, which make up the majority of long-term care services.