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Managing Medicare's Costs

What Medicare does not cover

Medicare’s history has been one of gradually improving coverage. One reason is that new benefits have sometimes been needed to keep pace with medical advances. When studies showed that continuous glucose monitoring devices help diabetics control their blood sugar levels, Medicare said it would cover them.

In other cases, benefits have been added to respond to an emerging need. In 2003, millions of retirees did not have any prescription drug coverage. And many seniors had stopped taking one or more of their medications because they could not afford them. That unmet need led to the creation of Medicare’s prescription drug benefit – Part D.

Moreover, Medicare can cut sometime cut costs by enhancing its benefits. The Affordable Care Act provided free preventive tests and screenings for Medicare beneficiaries because Congress believed that it would save money in the long run.

All told, there have been hundreds of upgrades to its coverage since Medicare began in 1965. But with a few notable exceptions, most have been minor changes. And there is still a fairly long list of medical services – from acupuncture to wisdom teeth extractions – that Medicare does not cover.

It can be helpful for retirees to know which services are not covered by traditional Medicare, and whether there are other ways to get coverage, perhaps in a Medicare Advantage plan. Here is a list of frequently used services that are not covered by traditional Medicare:

Long-Term Care (LTC). Medicare does not cover custodial care, which is care for individuals who need help with the activities of daily living. More than one-third of people will need long-term care at some point, according to statistics published by Morningstar. And that estimate does not include unpaid long-term care that’s provided by family members. Medicare does, however, cover medical care for people in nursing homes and assisted living facilities. And it covers stays in skilled nursing facilities following hospitalizations.

If at some future point you require long-term care in a nursing home, there are three possible ways to pay for it, and many retirees use a combination of all three:

Pay out of pocket. A ballpark estimate is that a semi-private room in a long-term care facility costs $100,000 a year, although that number may vary quite a bit depending on the level of care and the state you live in. To get a more accurate cost estimate for the state you live in, check out Genworth’s 2019 Cost of Long-Term Care Report.

The average nursing home stay is just over two years, but the median stay is less than six months. That means there are a large number of stays that last a few weeks or months, and a small number that last several years.

Rely on LTC insurance to pay some or all the costs. Only 7.5 million people have LTC policies today – that’s compared to more than 50 million people who are 65 and older. And even though the total number of insured lives has slowly been increasing, the number of new LTC insurance policies sold each year has been declining.

You can also invest in an annuity or life insurance policy that has a long-term care rider. And if you never need long-term care, the life insurance or annuity will keep their full value. The downside is that if you do have a LTC stay, the payout will be less than with traditional LTC policies.

Qualify for assistance from Medicaid. Six out of ten nursing home residents rely on Medicaid to pay some or all the costs for their long-term care. Even people who have LTC insurance will sometimes exhaust their benefits and spend their resources down to the point that they qualify for Medicaid. Unfortunately, the eligibility rules for Medicaid LTC assistance are not only complex, but they are different in each state.

After long-term care, the next largest coverage gaps are for dental, vision, and hearing care. These three types of care are covered by most employer retiree plans, and they may be the next major additions to Medicare’s coverage.

In December of 2019, the House passed a resolution that will add Medicare benefits for these services, but the Senate has yet to vote on it (and may not do so). Below are summaries of traditional Medicare’s current and very limited benefits for these three services.

Dental care. Medicare does not cover routine dental care or dentures. But it does cover dental work if the teeth or jaw have been damaged by a disease or in an accident. Elsewhere, most employer retiree plans include dental coverage, as do 60% of Medicare Advantage plans.

The Kaiser Family Foundation reported in a 2019 study that more than 10 million enrollees had access to dental care through their Advantage plans (some plans charge an additional premium). Before enrolling in an Advantage plan to get dental benefits, make sure that your dentist will accept the plan’s coverage.

As a rule, Medigap policies do not include dental or vision coverage. In recent years, however, some states have authorized the sale of “innovative” Medigap policies that include dental and vision benefits. But even in these states, few Medigap insurers offer them.

You can also buy dental insurance on the open market, but stand-alone dental policies are rarely cost effective since they are not subsidized by Medicare or by the employer. And in some states Medicaid covers dental care. The Kaiser Family Foundation estimates that two-thirds of retirees have no dental coverage.

Vision Care. Routine vision care — eye exams and eyeglasses — is not covered, and neither is Lasik surgery. But Medicare does cover treatments for diseases of the eye — glaucoma, macular degeneration, cataracts, etc. For cataract surgery, Medicare will cover new mono-focal lenses, but If you need multi-focal lenses, you will pay the additional cost.

Hearing aids. Hearing tests and hearing aids are not covered by traditional Medicare. Hearing loss affects roughly 30 million people, according to an AARP report. Yet two-thirds of those 30 million don’t get hearing aids, in most cases because the cost is too great. A hearing aid typically costs between $2,500 and $6,000, and many people need one for each ear.

Advantage plans often have some benefits for people with hearing loss, including a hearing exam and in some cases a discount toward the purchase of a hearing aid. Another possibility is for military veterans to see if they qualify for hearing benefits, including cochlear implants. Almost 3 million retired military personnel now receive disability benefits for hearing loss.

Other common medical services not covered by Medicare include:

Routine foot care. Medicare covers foot ailments and injuries, but not routine care, which includes the removal of corns and calluses. Nor does Medicare cover shoe insoles and orthotics.

Foreign travel. In most cases, Medicare will not cover medical treatments that you receive in other countries. For Medicare’s purposes, Puerto Rico, Guam, the Virgin Islands, American Samoa, and the Northern Mariana Islands are considered part of the United States.

One exception is that if you are in the United States and have a medical emergency, you’ll be covered when you go to the nearest hospital, whether it’s in the U. S. or another country. Even if it’s not a medical emergency, if the hospital nearest your home is in another country, you’ll be covered.

Another narrow exception is that if you have a medical emergency while traveling between Alaska and another state, you’ll be covered if you go to a Canadian hospital (assuming it’s closer than the nearest U. S. hospital).

What if you’re on a cruise and need medical care? The Medicare web site says that if you board a cruise ship “within the territorial waters adjoining the land areas of the United States, Medicare won’t pay for health care services when the ship is more than six hours away from a U. S. port.”

Medigap Plans C, D, F, G, M, and N include benefits for foreign travel emergencies, covering 80% of the cost after you’ve paid a $250 deductible, with a $50,000 lifetime limit.

Some employer retiree health plans include coverage for medical emergencies in other countries, but few Advantage plans do. Another option is purchase trip insurance that includes coverage for medical emergencies in other countries.
Annual physical exams*

When you first enroll in Part B, you have a 12-month period during which you can get a free “Welcome to Medicare” physical. Otherwise, Medicare does not cover annual physicals. ΔΔ

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