Be sure you know what Medicare covers -- and doesn't

Just because Medicare is called "medical insurance" doesn't mean it's comparable to the comprehensive health coverage you may have enjoyed while you were working. For example, Medicare doesn't cover dental, vision or heading aids, whereas many work-based plans might cover a portion of the costs for these items.

Here are more examples of what Medicare does and doesn't pay for:

  • Medicare might pay for a diagnostic hearing test that your doctor orders as a result of an injury or illness, but it won't pay for routine hearing tests or the hearing aids themselves.
  • Medicare might pay for tests and medical treatment for vision problems that develop as a result of an injury or illness, but it won't pay for routine vision tests, glasses or contact lenses.
  • Medicare might pay for dental treatment that results from an injury or illness, but it won't pay for routine dental exams, cleanings, root canals or orthodontic work.

The bottom line? It's a big mistake to assume that Medicare is like your work-based health care plan.

The fact is, Medicare has significant gaps in the medical coverage it provides, due to its significant deductibles and co-payments. As a result, it's a good idea to buy a health plan that will close these gaps, either by purchasing a Medicare Supplement Plan (aka Medigap) or a Medicare Advantage Plan.

Another potential advantage of purchasing one of these plans is that some might also cover a portion of costs for dental, vision and hearing tests. Some may also arrange for discounts with specified providers on hearing aids, glasses or contact lenses. If these services are important to you, you'll want to do your shopping carefully.

Medicare's coming open-enrollment period (Oct. 15 to Dec. 7) is the perfect time to review your coverage and possibly make changes in your plan that might better serve you.

Here's another important step: If you're considering retiring in the next six months from an employer that has provided a comprehensive health care plan, you might want to consider getting the most from that plan before you leave. This means making appointments for dental or vision exams, then buying new glasses or contact lenses, if necessary. If hearing is a problem, it's also a good time to get a diagnostic test and explore your options for hearing aids.

Another step before retiring is to tell all your health care providers that you're going on Medicare and ask if they have any special arrangements for Medicare patients. Many providers might want to keep you as a patient, so they might extend the same discounts to you that your health care plan may have negotiated.

There's one more serious health care threat that Medicare doesn't cover: the costs of long-term care. Let's distinguish between medical care and long-term care:

  • Medical care is treatment that helps you recover from an illness or injury. It's generally covered by Medicare, although with significant deductibles and co-payments.
  • Long-term care is custodial care to help frail people carry out common activities of daily living, such as using the bathroom, showering, preparing food and moving around the home. Medicare doesn't cover long-term care, except in limited circumstances when you're discharged from a hospital directly to a skilled nursing facility as part of your recovery treatment.

A recent survey reported that many people have the misconception that Medicare pays for long-term care, but that's simply not true. You need a separate strategy to address the very real threat of incurring potentially high costs for long-term care.

Living into your 80s and 90s in America today isn't easy, so it's not a good idea to "wing it." You'll want to spend the time it takes to explore your options and make smart choices. That way, you can enjoy your retirement, knowing you've done all you can to address threats that can derail it.

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Retirement Game-Changers: Strategies for a Healthy, Financially Secure and Fulfilling Long Life and Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck.