Many people approaching age 65 believe that once they enroll in traditional Medicare, their healthcare costs will be taken care of. In reality, Medicare doesn’t cover everything, and those coverage gaps can lead to unexpected out-of-pocket expenses if you’re not prepared.
At Tapparo Capital Management, we regularly speak with clients who feel unsure about how Medicare works and what their benefits actually include. As part of a comprehensive retirement plan, we believe understanding Medicare is an important step toward safeguarding both your healthcare and your finances. This article reviews some of the most common gaps in Medicare coverage so you can plan ahead and feel more confident about the road to retirement.
What Does Medicare Cover?
First, a quick overview. Medicare is the federal health insurance program for people age 65 and older, as well as some younger individuals with disabilities. It’s divided into several parts:
- Part A covers hospital stays, skilled nursing facility care, hospice, and some home healthcare.
- Part B includes outpatient care, doctor visits, preventive services, and some medical equipment.
- Part D offers prescription drug coverage.
- Part C (Medicare Advantage) is an alternative that combines Parts A and B (and sometimes D) through a private insurer.
While Medicare does provide solid baseline medical coverage, it’s far from comprehensive.
What Medicare Doesn’t Cover
Understanding what isn’t included in your Medicare health insurance is just as important as knowing what is. Here are some of the most significant healthcare expenses that fall outside Medicare’s scope:
1. Long-Term Care
One of the most notable exclusions is long-term care. Medicare may cover a short stay in a skilled nursing facility or limited home health services, but it does not cover custodial care. This includes assistance with activities of daily living such as bathing, dressing, eating, and mobility—services that are commonly needed as people age or develop chronic conditions.
Given the rising costs of long-term care, this gap can leave retirees and their families in a difficult position. Given that the national median cost for a private room in a nursing home exceeds $135,000 per year, without adequate planning, these costs can quickly deplete your savings.
2. Dental, Vision, and Hearing Services
Original Medicare does not cover routine dental care, eye exams for prescription glasses, or hearing aids, which are three types of care that become more necessary with age. You’ll need to either pay out of pocket, purchase supplemental insurance, or enroll in a Medicare Advantage plan that includes these services.
Beware! Medicare Advantage plans often tout their dental, vision, and hearing benefits, but the coverage for these items can be pretty thin. Many plans have low annual dollar caps, strict provider networks, and only partial coverage for big-ticket items such as major dental work or high-quality hearing aids. This means retirees can still face significant out-of-pocket costs when they need these services.
3. Prescription Drugs (Unless You Enroll in Part D)
Medicare Parts A and B do not include most outpatient prescription medications. If you don’t enroll in a Part D prescription drug plan or a Medicare Advantage plan that includes drug coverage, you could face significant costs. And if you delay enrolling, you may face penalties that raise your costs permanently.
4. Medical Care Outside the U.S.
Planning to travel in retirement? Medicare generally does not cover healthcare services received outside the United States. If you plan to spend time abroad, consider purchasing a travel health insurance policy or a Medigap plan that offers limited foreign travel emergency coverage.
5. Excess Charges and Deductibles
Even for services Medicare does cover, you’ll still be responsible for deductibles, co-pays, and coinsurance. For instance, in 2026, the Part A deductible is over $1,736 per benefit period, and Part B typically covers only 80% of approved services, leaving you to pay the remaining 20%.
Medicare Supplement Insurance (Medigap) can help reduce these costs, but premiums can be high and not everyone qualifies, especially if they enroll after their initial eligibility window.
Planning for the Gaps
To avoid financial surprises and know when you’re covered, consider these strategies:
- Explore Medigap or Medicare Advantage plans that may include additional benefits.
- Plan ahead for long-term care by researching long-term care insurance or alternative funding strategies such as hybrid life insurance policies with long-term care riders.
- Establish a healthcare savings fund to cover routine and uncovered expenses, especially if you’re in good health now but anticipate higher future costs.
- Work with a financial advisor who understands retirement healthcare planning and can help you integrate these costs into your overall retirement strategy.
Feel Confident About Your Medicare Choices
Your healthcare choices can have a major impact on your retirement plan. At Tapparo Capital Management, we help clients navigate Medicare with clarity, so they can make confident decisions at every step.
As part of our comprehensive financial planning services, we stay up to date on Medicare rules, enrollment timelines, and how different plans work together so your healthcare coverage aligns with your overall retirement strategy. To schedule a “Get Acquainted Call” to see if we are a good fit for each other, call 978-887-1121 or email andrew@tapparocapital.com.
About Andy
Andrew Tapparo is a fee-only financial advisor at Tapparo Capital Management, a financial planning firm in Topsfield, MA, helping clients turn their savings into a retirement income that lasts. Inspired by the quote “Choose a job you love, and you will never work a day in your life,” Andy founded Tapparo Capital Management in 1997 with a passion for helping clients enjoy a truly worry-free and fulfilling retirement and experience financial freedom. As a Retirement Income Certified Professional (RICP®), he designs retirement strategies along with sound money management to help clients retire with confidence.
Andy holds a Bachelor of Science in Industrial Engineering from Rochester Institute of Technology in Rochester, New York, and a Master of Science in Finance from Bentley University in Waltham, Massachusetts. Specializing in retirement income planning, Andy completed a comprehensive financial industry education program at The American College of Financial Services and was awarded the Retirement Income Certified Professional® designation. He is frequently quoted in the media as a financial expert.
Andy and his wife, Susan, live in Topsfield, Massachusetts, and have two beautiful daughters. Outside of work, he is an automobile enthusiast, enjoys taking road trips, and loves the Outer Banks of North Carolina. In his spare time, he volunteers with the local high school varsity girl’s basketball team as the team statistician and runs the team’s website. He is passionate about supporting charities that serve our veterans and their families. To learn more about Andy, connect with him on LinkedIn.
