(This article was written by Nerdwallet.com for Next Avenue.)
Navigating the financial decisions of health care in retirement is tricky and, as a recent Merrill Lynch/Age Wave study found, just 7 percent of people age 55 to 64 say they feel very knowledgeable about Medicare coverage options.
The truth is that Medicare doesn’t cover all health costs for people 65 and older; more like half of those expenses. And a Mount Sinai School of Medicine study found that out-of-pocket health care expenses exceed total assets for 43 percent of patients on Medicare in the last five years of life. (The new Dying in America report from the Institute of Medicine calls for broader Medicare coverage of long-term care.)
Co-payments, coinsurance and costs that aren’t covered by Medicare can quickly add up. Therefore, it’s essential to understand what Medicare doesn’t cover and to know your alternatives.
What Isn’t Covered by Medicare
Under Original Medicare (Part A and Part B), the federal government pays your health providers for medically necessary procedures, equipment and care. Part A is largely for hospital coverage, but also includes some nursing care and hospice costs. Part B covers physician appointments, labs and testing and medical equipment.
Many health expenses covered by private health insurance policies are excluded from Medicare Part A and Part B and these uncovered expenses can easily amount to thousands of dollars a year. Among the uncovered items: dentures, hearing exams and aids, eye exams related to corrective lenses, long-term care and custodial care.
Medicare coverage of any kind for nursing care is very limited and largely based on medical necessity. If you’re in a care facility, Medicare covers so-called “skilled care” — what’s performed by a medical professional. Custodial care (such as bathing, feeding and helping patients in and out of bed) is only covered while you also need skilled care.
What’s more, custodial and skilled care are only covered for a limited time. Medicare pays all costs for the first 20 days after a qualifying medical event, but charges $152 in coinsurance for days 21 to 100, and nothing after that.
Can Medicare Advantage Help?
Medicare Advantage, also known as Part C, is optional coverage sold by private insurers. If you buy a Part C policy, that insurer takes over your Part A and Part B coverage, but may offer additional coverage options.
Just how much a Medicare Advantage plan will cover depends on the policy. It might offer the vision, dental, and hearing coverage that Original Medicare doesn’t. So a Part C policy might be a good option if those are the only additional types of coverage you want.
A Part C policy rarely covers long-term care, though. Like Original Medicare, it typically only pays for nursing care that’s medically necessary and only for a limited amount of time. Since Medicare Advantage policies vary, it pays to ask insurers about long-term care coverage before you buy one.
Your Other Options
You may be able to turn to one or more of the following options to help pay for costs that Medicare won’t:
Medicare supplemental policy Also known as a Medigap policy, it's for Medicare Part A and Part B deductibles and co-pays, if the service is a partially-covered service of Medicare.
Medicaid If you have limited income and resources, find out whether you might qualify for Medicaid. This program’s coverage varies by state, so you’ll need to learn the rules where you live.
You can find them through Healthcare.gov, the federal site run by the U.S. Centers for Medicare and Medicaid. You can also get the phone number for your state’s Medicaid system by calling 800-MEDICARE or by visiting Medicare’s site.
Many people qualify for Medicare and Medicaid, and the combination leaves few costs uncovered. People who have Medicaid may even be covered for services not covered by Medicare, such as long-term and home health care.
Long-term care insurance Its coverage varies from insurer to insurer and from policy to policy, so if you want protection for skilled care and custodial care, be sure to ask for specifics.
Keep in mind that long-term care policies can be expensive and frequently don’t cover care for mental illness, alcohol or drug addiction, self-inflicted injuries or treatment in a government facility. An excellent, free primer: A Shopper’s Guide to Long-Term Care Insurance, from the National Association of Insurance Commissioners.
Appeals If you’re denied coverage for something you believe should be covered under your Medicare policy or if Medicare stopped paying for something it previously covered, you can appeal. Consult with your doctor first, for advice on how best to make your case and to get documentation to support your case.
Negotiating with medical providers If you find yourself with health care bills or services you can’t afford, you may be able to negotiate the costs with your medical providers. Some hospitals and clinics offer patients discounts based on their ability to pay or will set up reasonable payment arrangements.
You might want to hire a professional medical billing advocate to represent you in these negotiations — even to identify errors and oversights in your health bills. Many of them have health care backgrounds, which gives them an edge as advocates.
Paying for health costs in retirement typically requires a multi-pronged approach. Knowing what Medicare won’t cover can give you an opportunity to prepare for these expenses before they occur.
Elizabeth Renter writes for NerdWallet Health, a website that helps people reduce their medical bills.