Many people may assume they don’t have to worry about health care bills in retirement because they can rely on Medicare. That’s mostly accurate: Medicare will cover a significant amount of your hospital and medical expenses.
However, the federal program doesn’t always pay the full bill. And it doesn’t cover all procedures, including the routine dental and vision care that you might expect from workplace health insurance.
As you develop a spending plan for your retirement years, don’t forget to set aside savings for those medical bills that Medicare won’t cover. Here are seven costly health care expenses retirees can face that you may need to be ready to pay for yourself:
Health expense 1: A gap in insurance coverage
Medicare requires that you pay a share of certain health care costs. For example, Medicare Part B covers 80% of the approved amount for doctor and medical services, with the remaining 20% coming out of your pocket. And while Medicare Part A provides full coverage for the first 60 days in the hospital, you’ll also owe a steep deductible (for example, it’s $1,484 in 2021) for each benefit period, which could occur multiple times each year, depending on the length of your initial stay and the length of time between admissions.
All of these expenses can add up. According to an analysis by the Kaiser Family Foundation, retirees with basic Parts A and B Medicare, for example, spent an average of $5,776 in 2016 (the most recent data available) for out-of-pocket medical expenses beyond premiums.1 And inflation can add significantly to those costs over a typical 20- or 30-year retirement.
One way to fill the gap in Medicare coverage is by purchasing a Medicare Supplement Insurance policy, often called Medigap. Private insurers now offer up to eight Medigap plans in most states to new Medicare enrollees. Plans differ on the amount of coverage they offer. For example, most plans will pay the 20% coverage gap for medical services, while some pay only part of it.
Another option specifically for educators is the NEA Retiree Health Program, which offers supplemental policies with competitive group rates compared with the most popular individual Medicare Supplement plans. The NEA Retiree Health Program also provides discounts on vitamins, prescriptions, dental and vision care, podiatry, travel assistance and more.
There are no provider networks with the NEA Retiree Health Program, meaning you can choose your own doctor or hospital as long as they accept Medicare. Coverage is available nationwide and has been chosen by thousands of other NEA members. Use this interactive tool to find rates available in your state.†
In addition, an alternative to Original Medicare is a Medicare Advantage Plan sold by private insurers. Medicare Advantage bundles Parts A and B and often includes prescription drug coverage as well as some dental, vision and hearing benefits. Premiums may be lower with Medicare Advantage, but you’re generally subject to managed care and provider networks. This means you may not be able to choose your preferred doctor or hospital and may be required to get referrals for certain procedures. You may also be subject to high deductibles, coinsurance and out-of-pocket expenses with Medicare Advantage.
Health expense 2: Prescription drugs
Medicare doesn’t cover most outpatient medications. And if you have chronic health conditions, you could end up paying thousands of dollars each year for prescriptions.
If you enroll in Original Medicare, you can purchase a prescription drug plan, called Part D, to help pay for the medications. Even then, your out-of-pocket costs for deductibles and co-pays can be significant. For example, in 2021, once you and the plan pay $4,130 for prescriptions, you will be responsible for 25% of the cost of your drugs. That drops to 5% after total expenditures reach $6,550 for the year.
Health expense 3: Long-term care
This could be your most expensive health care expense in retirement—and many people are surprised to find out that it’s not covered by Medicare. Medicare will help pay for skilled nursing care on a short-term basis, say, for physical therapy following surgery. But you’re on your own if you need long-term custodial care to manage daily activities, such as bathing, eating or dressing.
The annual cost of long-term skilled care in 2020 ranged from $51,600 for a private room at an assisted living facility and $54,912 for a home health aide (44 hours per week) to $105,850 for a private room at a nursing home, according to Genworth’s most recent cost of care survey. The insurer projects that those costs, respectively, will rise to $93,195, $99,177 and $191,177 by 2040.2
If you have sizable savings, you could use them to pay for long-term care. And Medicaid will pay the nursing home bills for people who have very limited personal assets.
Households that fall in between might consider buying long-term care insurance. The policy may cover the cost of care at a nursing home as well as in your own home, at an assisted living facility or adult day care center. And the premiums you pay may be tax-deductible.
Advisers through the NEA Long-Term Care Program can help you find the right policy for you and your spouse, your parents, or your adult children. And policies purchased through the program offer exclusive NEA rates.
If you’re concerned about buying a policy you may never use, another option is to purchase a hybrid policy that combines long-term care and life insurance benefits. The policy will help pay the bills for long-term care if needed, but if you don’t end up requiring care—or not much—then your heirs will receive a death benefit from the policy.
Health expense 4: Dental care
As part of the aging process, older adults are more susceptible to gum disease, periodontitis, cavities, tooth loss and oral cancer, according to studies cited by the CDC.3 Unfortunately, Medicare doesn’t cover routine dental care, such as cleanings, fillings, root canals, tooth extractions or dentures. And those procedures can be expensive. Costs range from $75 to $200 for a cleaning, $150 to $450 for a filling, $300 to $2,000 for a root canal, and $3,000 to $4,500 for an implant, according to CareCredit.4
And while some retirees may be tempted to forgo dental care to save money, it can end up costing them in other ways. Dentists often can detect early signs of diabetes, oral cancer or heart disease that can be treated successfully if caught early enough.5
Many people on Medicare purchase an individual dental policy for coverage. And NEA members can get dental coverage through the NEA Dental and Vision Insurance Program, which fully covers routine exams, cleanings and other preventive care. It also provides coverage of crowns, implants and other dental procedures. You can choose your own dentist or save more by using one of the program’s preferred provider organizations (note that in Texas they’re referred to as a “contracting dentist,” and in Georgia they’re a “preferred provider”), which have more than 300,000 offices nationwide.
Find additional tips on how to save on dental costs.
Health expense 5: Vision care
Medicare will cover an annual eye exam for people with diabetes or who are at high risk for glaucoma. But it won’t cover routine eye exams, which can run $50 to $250 without insurance, according to VisionCenter.6 Nor does the program usually cover eyeglasses or contact lenses. That means the 92% of Medicare beneficiaries who wear glasses will be paying for exams, frames and lenses out of pocket.7
As with dental care, you can buy an individual policy for vision coverage. NEA members can add VSP vision coverage through the NEA Dental and Vision Insurance Program.
With more than 84 million members and over 100,000 access points nationwide, VSP boasts the largest national network of independent eye doctors. And through Renaissance Vision, you can access the VSP Choice Network and choose a provider from 39,000 doctors.
The insurance also has a low copay for exams and an annual allowance for frames or contact lenses.
The National Eye Institute also offers a list of services for those who need financial assistance for vision care.
Health expense 6: Hearing aids
About one-third of Americans ages 65 to 74 suffer from hearing loss, and that number increases with age. Nearly half of people older than 75 experience hearing difficulty, according to the National Institute on Deafness and Other Communication Disorders.8 Left untreated, loss of hearing can lead to more serious conditions, such as depression or dementia.
Hearing aids can be a solution for many, but Medicare doesn’t cover them. That means consumers purchasing them — at an average price of $2,588 — must absorb the cost of hearing aids that may last only a few years.9
The Food and Drug Administration is drafting regulations for over-the-counter hearing aids that would allow consumers to buy them in stores or online rather than through a hearing health professional. The regulations, expected sometime in 2022, likely will reduce the cost of hearing aids.
Health expense 7: Health care overseas
Generally, Medicare won’t pay for health care outside the United States or its territories, except in emergencies. That could be a concern if you travel internationally in retirement.
Other insurance can offer financial protection if you become seriously ill abroad. Most Medigap policies will cover 80% of emergency care outside of the United States, up to a lifetime limit of $50,000. You can also buy travel medical insurance that may cover doctor and urgent care clinic visits overseas as well as emergency evacuations. And some travel insurers may offer senior-specific policies.
Find tips to lower the cost of medications in our article “10 Ways to Save on Prescription Drugs.”
† Your acceptance in the NEA Retiree Health Program is guaranteed when you enroll during your Initial Enrollment Period (IEP) when you first become eligible for Medicare. You may also be eligible for an enrollment discount, and your spouse, domestic partner or surviving spouse may be eligible to participate. For more information, please call a member service representative at 1-844-213-1556.
1. How Much Do Medicare Beneficiaries Spend Out of Pocket on Health Care Costs, Kaiser Family Foundation, 2019.
2. Cost of Care Survey, Genworth, 2020.
3. Oral Older Adult Health, Centers for Disease Control and Prevention, May 2021.
4. Average Costs: Dentistry and Orthodontia, CareCredit.com, 2021.
5. Dental Management of the Medically Compromised Patient (8th Edition). St. Louis, Missouri: Mosby Elsevier.
6. How Much is an Eye Exam Without Insurance?, VisionCenter.org, 2020
7. Self-reported Eyeglass Use by US Medicare Beneficiaries Aged 65 Years or Older, JAMA Ophthalmology, September 2018.
8. Age-Related Hearing Loss, National Institute on Deafness and Other Communication Disorders, July 17, 2018.
9. Best and Worst Hearing Aid Brands and Retailers, Consumer Reports, January 15, 2019.