Medicare Won't Cover Everything -- Here's What Retirees Need to Budget For

Medicare likely forms the backbone of your retirement healthcare strategy, but if it's all you've got, you're at serious risk of draining your savings too quickly. Original Medicare covers the basics of doctor visits and hospital stays, and you can add on a Part D plan for prescription drugs. But there are plenty of other things that slip through the cracks.

You need a plan to cover the items listed below or else you could wind up paying for them out of pocket. And with the Medicare Open Enrollment period just around the corner, now's the perfect time to give your health coverage a closer look.

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What Medicare doesn't cover

Original Medicare doesn't cover the following costs:

• Eye exams
• Long-term care
• Cosmetic surgery
• Massage therapy
• Routine physical exams
• Hearing aids and exams
• Concierge medicine
• Services or items from a doctor who has opted out of participating in Medicare (except for emergencies)
• Most dental care

As mentioned above, you also won't have coverage for most prescription medications unless you purchase a Part D plan. These plans are administered through private health insurers and have their own premiums and deductibles.

You may not need all of the services above, but there's a good chance you may use some of them as you age, especially dental, hearing, and vision care. Long-term care may also be necessary if you become seriously ill. This can cost tens of thousands of dollars per month in some cases, depending on where you live and what type of care you require.

How to cover what Medicare doesn't

There are a few ways you can get coverage for the gaps in Original Medicare so you don't have to pay as much out of pocket. Some of the most common strategies are:

• Health insurance plan through an employer: If you or your spouse is still working and your employer offers a healthcare plan, you can use this coverage to supplement what Medicare doesn't cover.
• Medicare supplement plan: A Medicare supplement plan, also known as a Medigap plan, is a separate health insurance policy you purchase from a private insurer. It covers items and services that Original Medicare doesn't, but it has its own deductibles, premiums, and copays.
• Medicare Advantage plan: A Medicare Advantage plan, also known as Medicare Part C, is an alternative to Original Medicare. You purchase this plan from a private health insurer. It covers everything in Original Medicare, plus some extras, and leaves you with a single premium, deductible, and copay to worry about.

Even if you have one of the insurance types above, you likely still won't have any coverage for long-term care. You typically have to purchase a separate long-term care policy for that, which may also be expensive. However, if you shop around and purchase the policy while you're still fairly young and healthy, you may be able to find a good deal.

What to do when the Medicare Open Enrollment period begins

The Medicare Open Enrollment period runs from Oct. 15 to Dec. 7 this year. This may be your only time to switch health insurance plans during the year, unless you qualify for a special enrollment period due to things like losing existing coverage or moving to another state.

Start by looking over your existing health insurance plan. Note what you like and dislike and any gaps you feel need filling. Then, dive into the different plans available to you. Cost will obviously be an important factor to consider, but you also need to look at the coverage, the provider options, and the customer service.

Don't wait until the last minute to do this. Get started right away so you have plenty of time to evaluate all your options and find the plan or combination of plans that offers you the best deal.

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