Medicare is a vital safety net for millions of older Americans.
But it doesn’t cover everything. Unless you line up additional protection, Original Medicare by itself (Medicare Parts A and B) still leaves giant gaps in coverage that could potentially leave you with massive out-of-pocket costs in the event you need care.
This article discusses the gaps in Original Medicare and what the government plan doesn’t cover.
You’ll also learn how to use various private sources of protection, including Medigap, Medicare Advantage, Medicare Part D, or the lesser known Medi-Share 65+ health sharing program to help keep the health care you need affordable in your golden years.
The Gaps in Original Medicare
- Medicare Part A
Medicare Part A is primarily hospital insurance, covering inpatient hospital stays, care in skilled nursing facilities, hospice care, and some home health care.
However, it does not cover all hospitalization costs. As of 2024, the deductible for Medicare Part A is $1,632 per benefit period. That’s not per year, that’s per benefit period.
A benefit period under Medicare Part A begins the day you are admitted to a hospital or skilled nursing facility and ends when you haven’t received any inpatient hospital care (or skilled nursing care) for 60 days in a row.
So you could have to pay multiple Part A deductibles per year, not just one.
Additionally, after the initial 60 days of hospitalization, Medicare Part A requires you to pay coinsurance fees of $408 per day up to day 90, and $816 per each “lifetime reserve day” after that, for up to 60 days over their lifetime.
Once these reserve days are exhausted, you’ll be responsible for all hospitalization costs.
For qualified skilled nursing facility care, you’ll be responsible for a $204 per day coinsurance for days 21 through 100, unless you line up additional protection. After 100 days you’ll be responsible for all costs.
- Medicare Part B: Outpatient Care
Medicare Part B covers physician visits, outpatient care, preventive services, durable medical equipment, up to three pints of blood, and some home health care.
While the deductible for Part B might seem manageable at $240 annually, the real burden often comes from the 20% coinsurance required for many services. This can add up quickly, especially for those who need extensive outpatient treatment or specialty care.
Plus, there’s no cap on the total amount of co-insurance you might need to pay under Medicare Part B. Without Medigap or the Medi-Share 65+ health sharing plan, your exposure to high out-of-pocket medical costs is unlimited.
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Limitations of Medicare Advantage and Prescription Drug Costs
- Medicare Advantage Plans
Medicare Advantage (Part C) plans are an alternative to Original Medicare, offered by private insurance companies.
These plans often include benefits not covered by Original Medicare, such as dental, vision, and hearing care.
However, they come with their limitations. For instance, Medicare Advantage plans have an out-of-pocket maximum (MOOP), which can be as high as $8,850 as of 2024.
This cap helps limit financial liability but can still represent a significant expense for many retirees.
- Prescription Drugs and Medicare Part D
Original Medicare does not cover most prescription drugs taken at home. If you want insurance coverage for prescription drugs, you need a Medicare Part D plan.
Part D plans cover prescription drugs but can vary significantly in terms of cost and the drugs covered.
Medicare Coverage Exclusions
Despite the broad coverage, there are notable exclusions within the Medicare program:
- Long-Term Care. One of the most significant gaps in Medicare is its lack of coverage for long-term custodial care such as assistance with activities of daily living like bathing and dressing. Neither Original Medicare nor Medicare Advantage plans cover long-term care in facilities like nursing homes or assisted living. According to New York Life’s long-term care calculator, the average cost for nursing home care can exceed $100,000 per year, a substantial expense that must be planned for separately.
- Most Dental Care. Medicare excludes most dental care including routine procedures, cleanings, fillings, tooth extractions, and dentures. The only dental care covered under Original Medicare is reconstructive care following an injury or specific covered illness. Some Medicare Advantage Plans (Part C) offer additional benefits, including dental services. Coverage details and the extent of dental services covered can vary significantly between plans. If you want coverage for routine dental care, you should consider getting a stand alone dental plan.
- Vision Care. Original Medicare does not include eye exams for prescribing glasses, but it may cover some preventive and diagnostic eye exams.
- Cosmetic surgery. Medicare does not cover cosmetic surgery unless it is medically necessary, such as reconstructive surgery following an injury or disfigurement from a covered illness.
- Acupuncture. Medicare does not cover acupuncture.
- Hearing aids and fitting exams. Coverage does not include hearing aids or the exams for fitting them.
- Foreign Travel Benefits. For those who love to travel, it’s important to note that Original Medicare offers very limited coverage for medical services outside the United States. Beneficiaries who travel frequently should consider purchasing a Medigap plan that includes foreign travel benefits (80% up to $50,000 in costs), and/or a travel insurance policy.
How to Fill the Gaps
If you want protection against high out-of-pocket costs under Original Medicare, you have three basic options:
1. Purchase a Medicare Supplement (Medigap) Plan. Medigap is layered on top of Original Medicare, and helps pay Original Medicare deductibles, copays, and coinsurance. Most people also purchase a Medicare Part D plan to cover prescription drugs.
2. Purchase a Medicare Part C Medicare Advantage plan. These are private managed care plans that are offered as an alternative to Original Medicare Parts A and B. They cover everything that Original Medicare covers. Many Medicare Advantage plans also have a built-in prescription drug coverage component.
Medicare Advantage plans often have very low or zero monthly premiums. So they can be good if you are in good health and don’t expect to need care. But if you do need care, the out-of-pocket costs for these plans can be prohibitive.
3. Join Medi-Share 65+, an affordable non-insurance health sharing alternative to Medigap plans.
With Medi-Share 65+ and Medigap, you’ll still be in Original Medicare. Once you have $500 in Medicare Part A or B-approved costs per household (not per individual) in a given year, the Medi-Share 65+ health sharing community will share all costs approved but not paid under Original Medicare.
Like Medigap plans, Medi-Share 65+ does not include prescription drug coverage. So you should consider purchasing a separate Medicare Part D prescription drug plan alongside your Medi-Share 65+ plan.
Note: Unlike Medigap and Medicare Advantage plans, Medi-Share 65+ doesn’t share costs for pre-existing conditions right away. If you have pre-existing conditions, there’s a 6-month waiting period before costs to treat those conditions become shareable.
The Affordable Medi-Share 65+ Health Sharing Alternative
For members of Medi-Share 65+, which is a faith-based health cost-sharing program, understanding these gaps is crucial.
Medi-Share 65+ can complement Medicare by sharing costs that Medicare does not cover, depending on the member’s chosen program guidelines. However, like Medicare, Medi-Share 65+ does not typically share in all costs associated with long-term care or international health expenses.
| Medicare Part | Coverage Details | Gaps and Associated Costs |
|---|---|---|
| Part A (Hospital Insurance) | Covers hospital stays, skilled nursing facility care, hospice, and some home health care. | Deductible: $1,632 per benefit period. Coinsurance: $408/day for days 61-90 of a hospital stay; $816/day for each lifetime reserve day after day 90 for up to 60 days. Post-Reserve: All costs borne by the patient. Skilled nursing facilities: $204 coinsurance per day for days 21-100. After that, all costs are borne by patient. |
| Part B (Medical Insurance) | Covers physician visits, outpatient care, preventive services, and some home health care. | Deductible: $240 annually. Coinsurance: 20% of most services, which can accumulate significantly. |
| Medicare Advantage (Part C) | Alternative to Original Medicare offered by private companies. These plans often include extra benefits like dental, vision, and hearing. | Low premiums, and many plans have a zero premium. Out-of-Pocket Maximum (MOOP): Up to $8,850 in 2024. Can still result in substantial out-of-pocket expenses despite the cap. |
| Part D (Prescription Drug Plan) | Covers prescription drugs. | Coverage Varies: Plans differ in covered drugs and costs. Out-of-Pocket Costs: Includes copayments, coinsurance, and deductibles. |
| Original Medicare | Coverage Varies: Plans differ in covered drugs and costs. Out-of-Pocket Costs: Includes copayments, coinsurance, and deductibles. |
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Conclusion
For Medicare beneficiaries and Medi-Share 65+ members, being aware of what Medicare does and does not cover is essential for managing healthcare costs in retirement.
Planning for uncovered expenses such as long-term care, extensive outpatient treatments, and international health emergencies is crucial. By understanding these gaps, individuals can better prepare for the financial aspects of healthcare in their golden years, ensuring peace of mind and financial stability.
To effectively explore and choose the most suitable Medicare supplement, Medicare Advantage, Medi-Share 65+, Part D plan, and/or long-term care insurance tailored to your unique healthcare requirements, we recommend speaking with one of our Personal Benefits Managers.
Our experts offer complimentary, personalized consultations to ensure you are well-informed and confident in your decision-making process.
For Further Reading: Can I Switch to Medigap with Original Medicare? | Medicare Supplement and Medicare Advantage Plans: Which Are Better? | Medicare Supplement How To Guide: Making Sure You Have the Coverage You Need
Misty Berryman is one of your Personal Benefits Managers at Medigap Advisors. She loves working for Medigap Advisors for many reasons, including being part of the solution to one of life’s most important healthcare challenges: choosing the right Medicare plan. Read more about Misty on her Bio page.