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.
Long-term care, and associated prices, range in scope from home health aide assistance to assisted living to full-time nursing home care, but can put a huge burden on families that aren’t prepared to foot the bill. Planning for this financial risk may be one of the largest and most worthwhile components of retirement planning when it comes to considering healthcare related expenses.
2. Dental Care
Like any other aspect of our health, our teeth are naturally inclined to deteriorate over time, making proper care and nutrition of the utmost importance. However, original Medicare does not cover dental expenses, so even commonplace dental needs like teeth cleanings, routine dental visits, fillings, extractions and dentures will fall under the financial responsibility of the individual. As such, pre-retirees will need to assess how much dental coverage they’d like to carry before determining whether private dental insurance or a supplemental Medicare Advantage Plan would be most cost-effective.
3. Eye Exams or Corrective Lenses
Poor vision can negatively affect an elderly individual’s independence by decreasing their ability to perform daily activities such as dressing, moving about, bathing, taking medication properly, preparing their own food, and more. Individuals with poor vision are also at an increased risk for falls, the leading cause of both fatal and non-fatal injury among individuals over age 65.
Despite the fact that poor vision can so severely impact an individual’s daily life, individuals with only Medicare Part A and Part B must cover eye exams and corrective lenses out of pocket. Original Medicare does cover vision screening, but only a limited number of times and only for those considered “at-risk” individuals—those with age-related macular degeneration, cataracts, diabetes, or glaucoma.
4. Hearing Aids of Hearing Tests
Like dental and ocular health, auditory health can also become a costly expense for the elderly with the National Institute of Health reporting that 1/3 of individuals between age 65 and 74 years old (and ½ of individuals over age 75) suffer from hearing loss.
Medicare does not routinely cover the hearing exams many elderly people need to manage their hearing loss and maximize their quality of life unless they specifically complain of symptoms. And even in the event that they report their symptoms and are able to get their initial exam costs covered, Medicare will not pay for an exam to fit hearing aids or for the devices themselves. Hearing aids can range in price from $1,000 to $4,000 and the exam prices will vary from doctor to doctor. These initial costs do not even take into consideration the price of routine exams that may be needed and/or the fee to replace hearing aids should one be misplaced or damaged.
5. Some Prescription Drugs
Prescription drugs can be surprisingly costly, especially when paid for out of pocket.
While prescription drug coverage can be purchased through a Medicare Advantage Prescription Drug Plan (MAPD) or a stand-alone Medicare Part D Prescription Drug Plan, there are still many drugs that will not be covered, such as:
- Some brand name drugs for which there is no generic substitute
- Over the counter (OTC) medications
- Medications not approved by the FDA
- Medications sold outside the US
- Medications not used for a medically accepted purpose, such as drugs used to treat sexual dysfunction or address cosmetic issues such as hair loss
Unfortunately, as well, a big problem with Medicare prescription drug coverage is that the formularies which determine the drugs to be covered are constantly changing. A drug covered and taken by an individual for many years may suddenly be dropped from coverage. Unexpected changes like these can put quite the damper on an individual’s budget. In these and similar cases, individuals may be forced to choose between paying for the drug out of pocket or going without. In any case, individuals will want to research the drug plan they choose before paying for a plan that provides inadequate coverage.
If you are planning to enroll in Medicare, be sure to select the plan that best suits your healthcare needs. In some cases, private insurance policies and/or long-term care insurance may be necessary to obtain for proper financial risk management. If you are unsure how to work healthcare related expenses into your retirement plan, one of the financial professionals at Harbor West can help you assess your current and projected financial need and make an informed decision. Contact us today to schedule a complimentary discovery call with one of our trusted advisors.
This information is provided for general purposes and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made as to its accuracy or completeness. Before acting on any of the information, please consult your Financial Advisor for individual financial advice based on your personal circumstances. Neither Harbor West nor Geneos Wealth Management, Inc. provide tax or legal advice. Harbor West is a division of NorthEast Community Bank. Securities and advisory Services offered through Geneos Wealth Management, Inc. FINRA/SIPC Investment Advisory and Financial Planning Services offered through Geneos Wealth Management, Inc. Investments are not FDIC Insured. Investments are not deposits of the financial institution and are not guaranteed by the financial institution. Investments are subject to risks including loss of principal.