Mary Anna Thomas

Medicare’s Sneaky Expenses – 21 Costs Catching Boomers Off Guard

Many consider Medicare a comprehensive healthcare safety net as Americans approach retirement age. However, Medicare alone may not be the complete solution for managing healthcare costs as hidden costs and caveats are involved. We take a look at 21 ways Boomers are struggling with the hidden costs of Medicare and what they can do about it.

Deductibles

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Most Medicare plans involve deductible upfront payments that need to be paid before you can start to use your plan. If you are in the hospital several times a year, as many Boomers will be, you will likely pay for your first lot of treatment, and any subsequent costs will be covered. 

Copays

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Copays are fixed amounts you pay for certain covered healthcare services after your deductible has been met. You can expect copayments for hospital admissions, skilled nursing facility stays, and some home healthcare services.

Monthly Premiums

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Part B Medicare covers general doctor appointments and outpatient services. The monthly premiums can be a burden for Boomers on a fixed income or who have retired, particularly as prices tend to rise each year. 

Coinsurance

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Coinsurance is a way of sharing the cost of covered services with the program after you’ve met your deductible. Unlike copays, which are fixed dollar amounts, coinsurance is a percentage (usually 80%) of the Medicare-approved amount for a service that you are responsible for paying.

Drug Premiums

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Part D Medicare plans have monthly premiums that will vary depending on your chosen plan and the medications you need. For older generations, medication costs can be significant as conditions such as diabetes, arthritis, and heart disease are common. 

Coverage Gaps

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The coverage gap, also known as the donut hole, is when you have limited drug coverage and may have to pay more for your medications. In 2024, you enter the donut hole once combined spending on covered drugs by you, and your plan reaches $5,030, which can be early on for Boomers with a medical condition. 

Long-Term Care

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Medicare doesn’t cover most long-term care costs, such as nursing homes or assisted living facilities. With 70% of elderly Americans expected to need some sort of long-term care, including assisted living, this can be a significant strain. 

Dental Care

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Traditional Medicare does not cover regular dental care, so Boomers must find money for a separate dental insurance plan. As teeth can cause many issues in older age, Boomers face significant bills.

Vision Care

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Like dental care, routine vision care, including eye exams, glasses, and contacts, isn’t covered by original Medicare. Again, like dental care, older people face a decline in their eyesight, so they should expect to spend a significant amount of money on vision care. 

Medigap Plans

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Medigap plans are supplemental insurance plans that can help cover some out-of-pocket costs associated with Medicare. However, the additional premiums can strain Boomers’ expenditures.   

Medicare Advantage Plans

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Advantage plans are alternative plans offered by private insurers that bundle various coverages, including parts A and B, and sometimes Part D. While these plans are a good option for elders, they may have network restrictions and higher out-of-pocket costs. 

Supplemental Coverage

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Many Boomers are aware of the hidden costs of Medicare and the exclusions they may face. Therefore, they consider additional insurance like Long-Term Care insurance to protect their finances in case of unexpected medical needs. While this sounds good in theory, not all elders have enough retirement income to cater for such coverage. 

Higher Utility Bills

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According to the U.S. Energy Information Administration, the average U.S. household has seen a 2% increase each month in utility bills due to rising energy costs worldwide. With Boomers often relying on heating more than other generations, they face higher-than-average bills if they want to keep themselves well in winter. 

Retirement Affordability

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Many people feel the strain of the increased cost of living, with grocery bills, rent, and insurance just a few of the bills rising alongside utility bills. With monthly outgoings increasing, there is less in the budget for unexpected healthcare costs. 

Dipping into Emergency Funds

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Whether it be supplementing monthly income or splashing out on fancy vacations, some retirees are in danger of eating through their emergency funds. An emergency fund is vital when an unexpected medical event, such as a cardiac arrest, occurs.

Factoring in Hidden Costs

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It is vital that Boomers factor in Medicare’s hidden costs when budgeting for retirement. Even if they are fit and healthy, they should consider potential healthcare issues that may not be covered by Medicare premiums. This could mean saving more each month in preparation for what may lie ahead. 

Start Saving Early

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Starting to save earlier is the best thing anyone can do to prepare for medical care when they retire. This may be too late for Boomers, but it is the advice they are passing on to younger generations. 

Consider Moving

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Some states, such as Hawaii, have lower healthcare costs than others. This means some retirees look to move to a cheaper state when they become ill. While Medicare premiums are unlikely to change, additional costs may be lower. 

Negotiate Medical Bills

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Boomers shouldn’t be afraid to negotiate medical bills, as there may be surprising cost-cutting opportunities. Some savings may be small but will add up over time, often saving hundreds of dollars. 

Utilize Resources

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There are government programs and non-profit organizations that can help low-income seniors with healthcare costs. You can look online or search for local services that can help you. 

Stay Healthy

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Staying active and healthy is the best way to avoid high healthcare costs. Preventative care is key to maintaining a healthy lifestyle and can help reduce future medical expenses. Small actions such as reducing the amount of sugar you eat daily and taking extra steps can make a huge difference. 

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