Medicare Doesn’t Cover Everything; Supplemental Medicare Can Help
Original Medicare doesn’t cover everything, and this can result in high costs and coverage gaps. Supplemental Medicare coverage like Part D, Medigap, or Medicare Advantage (Part C) can help.
Understanding What Medicare Does and Doesn’t Cover and What You Can Do About It
Medicare enrollees lack crucial services such as hearing, vision, and dentistry and, also, are exposed to high out-of-pocket costs for services and drugs with no fixed cap on spending. Additional insurance such as Part D and Medigap or a Medicare Advantage plan can help set limits on some costs, but not all.
The Medicare Part D prescription benefit covers 5% of drug costs above the catastrophic threshold unless the enrollee has other subsidies. Even this small amount has resulted in increasing numbers of Medicare Part D enrollees having out-of-pocket drug costs above the catastrophic coverage level. In fact, in 2015, one million enrollees without subsidies had medication costs above the catastrophic coverage threshold. According to KFF, this is twice the 2007 spending levels.
Enrollees with high out-of-pocket prescription costs spent an average of over $3,000 a year per person in 2015. 10% of them paid $5,200 or more. This is caused by the increasing use of expensive drugs such as treatments for Hepatitis C, viral hepatitis, schizophrenia, Multiple Sclerosis, HIV/AIDS, Leukemia, and Lymphoma.
Medicare Advantage plans limit the maximum out-of-pocket cost of enrollees. However, the coverage they provide for hearing, vision, and dentistry is insufficient for most services. Also, some healthcare services may not be covered by your plan, and all plans use formularies that can make the use of common generic drugs affordable while leaving other prescription drugs with very high, perhaps prohibitively high, costs. If you use drugs that are not on your insurance formulary, see providers who are not in your network, or use non-covered services, you can find yourself with significant costs.
Who is At Risk of Significant Financial Costs?
Those with multiple chronic conditions or functional limitations are at the highest risk of having high financial burdens. This is also the group that can be expected to have the most difficult time navigating bureaucracies to apply for assistance. 42% of those with low incomes and poor health spent over 20% of their income on cost-sharing and uncovered medical care.
For hard data on the numbers of Medicare enrollees with high out-of-pocket costs including costs for hearing, vision, and dental needs that have to be paid out of pocket, see Medicare Beneficiaries’ High Out-Of-Pocket Cost: Cost Burdens by Income and Health Status.
Fortunately, the provision of the Affordable Care Act that eliminated lifetime spending limits by insurance companies ensured that those with catastrophic events and chronic conditions do not suddenly find they have used up their lifetime supply of insurance benefits while their medical needs continue. This applies to Medicare as well as the private insurance market.
What Can Be Done?
Everyone should pay attention to Medicare open enrollment and take the opportunity to make sure they are getting the most appropriate insurance coverage available to them. A visit to Medicare.gov is a good place to start.
You are likely to have non-covered needs, particularly those involving hearing, vision, and dental care. If you can find a clinic, you may be able to get low-cost or free care. Some insurance plans for these specific needs are available. However, you should examine them carefully. The benefits are often limited.