A very simple (yet important) fact about Medicare is that it is not free. There are deductibles, copayments, and coinsurance that still need to be paid. Related to cost, and of equal importance, is the fact that some healthcare services are not covered by Medicare.
Knowing what Medicare covers, and what it does not, is critical
Understanding what Medicare does and does not cover allows beneficiaries to plan for healthcare costs, as well as determine how to pay for certain healthcare services that they may want or need in the future. In addition, it will help prevent the unfortunate circumstance of a surprise bill for a service that a Medicare beneficiary may have mistakenly thought was covered. Finally, understanding what is covered helps Medicare beneficiaries take full advantage of all healthcare services that Medicare does cover – some of which are totally free!
Discovering What’s Covered
Original Medicare (i.e., Parts A and B) covers most basic medical services. In general, Medicare Part A covers hospitalizations (i.e., inpatient care) and Medicare Part B covers outpatient care.
Medicare Part A
To be covered under Part A, a Medicare patient must actually be admitted to the hospital. Part A also covers inpatient care at a skilled nursing facility. For example, if a patient has a stroke and is admitted to the hospital for a few days, then released to a rehab facility to regain strength and coordination on one side of the body, that would be covered under Part A. In addition to inpatient care, Part A also covers home healthcare in limited circumstances, as well as hospice care.
Medicare Part B
Part B covers outpatient clinical services like doctor’s visits and emergency room visits, including for observation. For example, if a patient falls and hits their head, then goes to the emergency room to get checked out, and are told to stay for 12 hours for observation, that is not technically an admittance and so it would be covered under Part B.
In addition to outpatient care, Part B also covers medical supplies (think splints and casts, or crutches or a wheelchair), X-rays and other radiology services, and preventive care and screening services. One important fact about this last category, is that many of the preventive care and screening services covered under Part B are free; there is no coinsurance or other cost sharing. Screenings for many cancers (including breast, cervical and vaginal, colorectal, and lung) are free, as are screenings for depression and diabetes.
Many Medicare beneficiaries do not understand that these screenings, as well as many other preventive services (like flu shots), are free; consequently, they fail to seek out those services. Failing to be aware of and take advantage of these free preventive and screening services can delay diagnosis and treatment of many different health conditions, ultimately impacting longevity and quality of life, not to mention increasing the eventual cost of treatment when an ailment’s symptoms appear later in a more advanced stage. As the adage goes, an ounce of prevention is worth a pound of cure!
Medicare Part D
Part D covers prescription drugs. Unlike Parts A and B of Original Medicare, Part D is provided by private insurers and not the federal government. What specific drugs it covers depends on the particular plan purchased. Cost and coverage may change from year to year.
Medicare Advantage (aka “Part C”) Plans
Medicare Advantage plans replace Original Medicare (i.e., Parts A and B). In addition to covering everything Original Medicare covers, they usually also include Part D prescription drug coverage. Like Part D plans, Medicare Advantage plans are provided by private insurers; not the federal government. Medicare Advantage plans also may include other services that are not covered by Original Medicare. Speaking of that topic, let’s dig deeper into what services are not covered by Medicare.
Uncovering What’s Not
Original Medicare does not cover everything. Of particular importance are the following exclusions.
Dental, Vision, Hearing
Three basic categories of services that are not generally covered, which most older Medicare beneficiaries will need, are vision, dental, and hearing services. For example, dentures and exams related to fitting hearing aids or prescribing glasses will not be covered.
Care outside of the USA
In most circumstances medical services received outside of the USA are not covered by Medicare, regardless of whether the Medicare beneficiary is travelling abroad or an ex-pat living abroad. This is critical information to understand for both sets of individuals.
Possibly the most significant exclusion from Medicare coverage is long-term care (LTC). LTC includes the types of daily tasks that someone used to be able to do on their own, like bathing, dressing, eating, and using the toilet. Regardless of whether age or injury create the need for LTC services, the costs really add up over time. Consequently, understanding that LTC is not covered is very important.
How to Plan and Pay for Uncovered Services
Understanding what is not covered by Medicare is important so that Medicare beneficiaries are able to make alternative plans for care and financial arrangements to pay for those non-covered services.
One possible solution for dental, vision, and hearing care is to check out Medicare Advantage plans, some of which do cover those services. A separate possible solution for those who enroll in Original Medicare is to purchase separate stand-alone vision, dental, and/or hearing plans.
For Medicare beneficiaries who intend to travel abroad, they will need to purchase travel insurance in advance of any trip to cover the costs of any injuries or medical issues that arise while away. For those planning to live abroad, it will be important to plan not only for how to cover medical costs in the foreign country, but also determine when to enroll in Medicare if they ever plan on returning home.
In terms of planning for LTC, Medicare Advantage plans may also offer some benefits, but it will be important to read the fine print for limitations. Another LTC solution may be a separate LTC insurance policy; such an LTC policy may be a stand-alone policy or a rider on a life insurance policy.
Finally, aside from finding other sources of coverage for those medical services not provided by Medicare, it will also be important to make plans to pay for those services. This is where a financial professional can really make a difference in the lives of their older clients. Financial professionals who can help Medicare beneficiaries analyze their monthly budgets to determine how to most cost-efficiently cover these additional premiums, deductible, copays, and/or coinsurance for non-Medicare covered services could set themselves apart from peers and competitors.