Healthcare Costs in Retirement — What Medicare Doesn't Cover

Medicare covers a lot. It doesn't cover dental, vision, hearing, or long-term care. These four gaps will cost the average retiree $150,000–$350,000 over retirement.

Most retirement planning models assume healthcare costs are "handled" once you hit 65 and qualify for Medicare. They're not. Medicare is excellent for hospital stays, doctor visits, and most outpatient care. But it has systematic gaps that produce real, significant expenses that your retirement plan needs to budget for.

Let me go through each one with actual numbers.

What Medicare Actually Covers

Before the gaps, it helps to understand what you're getting.

Medicare Part A (hospital): Premium-free for most people. Covers inpatient hospital stays (with deductibles after 60 days), skilled nursing facility care (limited), hospice, and some home health.

Medicare Part B (outpatient): Standard premium in 2024 is $174.70/month (higher if your income is over $103,000 — the IRMAA surcharge). Covers doctor visits, outpatient procedures, preventive care, lab tests, durable medical equipment.

Medicare Part D (prescription drugs): Separate premium (average $55/month). Covers most prescription medications.

Combined, you're paying roughly $230–400/month per person for basic Medicare coverage, depending on income. For a couple, $460–800/month. This is well below what employer group insurance costs, which is why Medicare is genuinely valuable.

But here's what it doesn't cover.

Gap 1: Dental — Estimated $150–$1,500/Year

Medicare does not cover routine dental care. No cleanings. No fillings. No dentures. No dental X-rays.

Dental costs accelerate with age. By 65, most people need at least one crown ($1,000–1,800), and by 75, many need dentures ($1,500–4,000) or implants ($3,000–6,000 per tooth). A full set of implants can run $25,000–50,000.

What to do: - Dental insurance through AARP or a private insurer: $35–80/month per person, covers preventive and some restorative work. There are annual limits ($1,000–2,000), so it doesn't cover the big stuff fully. - Dental schools: Procedures done under faculty supervision at dental schools run 40-60% less than private practice. Quality is generally high for routine work. - Budgeting: I budget $1,200/year for dental regardless of what my insurance covers. The insurance fills some gaps; the budget covers the rest.

Over 20 years, dental costs for a couple total $24,000–60,000. Budget for it.

Gap 2: Vision — Estimated $200–$600/Year

Medicare doesn't cover routine eye exams or eyeglasses. It does cover medically necessary eye care (cataract surgery, diabetic eye disease treatment), but your annual checkup and prescription update are out of pocket.

This is less catastrophic than dental but adds up. An annual eye exam runs $100–200. New glasses or contacts: $200–600 annually if you need a new prescription. Cataract surgery, when needed, is typically covered by Medicare Part B — the out-of-pocket can run $2,000–5,000 depending on the lens option you choose (standard is covered; premium lenses for astigmatism or progressive vision cost extra).

What to do: - Vision insurance through AARP or similar: $15–25/month, covers most routine costs. Worth it if you regularly update prescriptions. - Costco/Walmart optical departments: For glasses, the markup at optical retail is enormous. Costco runs $100–200 for frames and lenses; the same prescription at LensCrafters might be $400–600.

Gap 3: Hearing — The Expensive Surprise

Medicare doesn't cover hearing exams (for fitting hearing aids) or hearing aids.

This one is expensive. Hearing loss is the third most common chronic health condition in older adults, and by 70, roughly one in three people have meaningful hearing loss. By 80, it's half the population.

Traditional hearing aids: $2,000–7,000 per ear. A pair runs $4,000–14,000 at an audiologist, and insurance doesn't touch it. Hearing aids typically last 5–7 years, then need replacement.

The math over 20 years: if you need hearing aids at 70 and replace them twice, you're spending $8,000–28,000 on hearing care.

What to do: - OTC hearing aids: Since 2022, the FDA allows over-the-counter hearing aids for mild to moderate loss. Brands like Jabra Enhance and Sony sell OTC models for $200–1,500 per pair. They're not as customizable as audiologist-fitted devices, but for mild loss, they work well and cost 90% less. - Costco hearing aids: Costco carries hearing aids at $1,400–2,100 per pair, significantly below audiologist pricing. They use name-brand devices and include follow-up adjustments. - Budget: I set aside $1,500/year for hearing-related costs (audiologist visits, OTC aids, replacements). For a couple over 20 years, this means budgeting $30,000–60,000 in hearing care.

Gap 4: Long-Term Care — The Real Risk

This is the big one. Medicare covers short-term skilled nursing care (up to 100 days after a qualifying hospital stay), but it does not cover custodial care: the day-to-day help with bathing, dressing, meals, and personal care that people need when they can no longer fully care for themselves.

The statistics: - 70% of people who reach age 65 will need some form of long-term care - The average need is 3 years; one in five will need 5+ years - Average cost of a private room in a nursing home: $105,000/year (2024) - Average cost of assisted living: $54,000/year - Average cost of in-home care (40 hours/week): $65,000/year

For a married couple, the risk compounds: one partner may need care while the other is still living. This can deplete savings needed by the surviving spouse.

The options:

1. Self-insure: If you have $2M+ in assets, you may be able to absorb long-term care costs without insurance. This means accepting the risk that care costs deplete a significant portion of the estate.

2. Long-term care insurance (LTCI): Traditional policies have become expensive and some carriers have exited the market. A policy for a healthy 60-year-old might run $2,000–4,000/year per person. By 65, premiums are higher; by 70, insurability becomes a concern. If you're going to buy traditional LTCI, 60–63 is the window.

3. Hybrid life insurance/LTCI: Life insurance policies with long-term care riders have become more popular. You put a lump sum (typically $50,000–150,000) into a policy that provides a death benefit AND can pay for long-term care if needed. If you never need LTC, the death benefit goes to heirs. These are more predictable and won't have premium increases.

4. Medicaid planning: For people with modest assets, Medicaid eventually pays for long-term care — but only after you've spent down nearly all your assets (the spend-down rules vary by state). An elder law attorney can help structure assets to qualify for Medicaid protection if this is your likely path.

My approach: I have a hybrid life insurance/LTC policy purchased at 63. The premium was significant, but the exposure was larger. Watching a parent spend $120,000/year for three years in memory care — while my other parent still needed to live on the remaining assets — was the event that moved me from "I'll think about this" to "I need to act."

The Supplemental Insurance Layer

Many Medicare recipients buy supplemental coverage (Medigap or Medicare Advantage) to reduce out-of-pocket costs for what Medicare does cover.

Medigap: Fills the gaps in traditional Medicare (Parts A and B) — deductibles, copays, coinsurance. Premiums vary by plan and state but average $150–300/month. Plan G is the most comprehensive; Plan N is lower premium with modest copays.

Medicare Advantage (Part C): An alternative to traditional Medicare — a private plan that covers Parts A, B, and usually D in one plan. Often includes dental, vision, and hearing benefits at no extra premium. May restrict you to a network.

The dental/vision/hearing benefits in Medicare Advantage sound appealing, but limits are typically $500–1,500/year — enough for routine care, not enough for major work. Still better than nothing.

What the Real Number Looks Like

Fidelity's annual "Retiree Healthcare Cost Estimate" puts the total healthcare cost for a couple retiring at 65 at $330,000 in 2024 dollars (not including long-term care). That's premiums, copays, and out-of-pocket for the major categories Medicare does cover.

Add long-term care: the average person who needs it spends $138,000 total ($46,000/year for 3 years). For a couple, you might plan for one partner needing 3 years at $60,000/year (assuming a mix of home and facility care) = $180,000.

Total realistic healthcare budget for a couple, ages 65–85: - Medicare premiums (both partners, 20 years): $120,000–200,000 - Dental (both, 20 years): $24,000–60,000 - Vision (both, 20 years): $8,000–20,000 - Hearing (both, 20 years): $20,000–40,000 - Long-term care (one partner, 3 years): $120,000–200,000

Conservative estimate: $290,000 Realistic estimate: $520,000

This is real money. It needs a real line in your retirement budget.

Practical Planning Steps

Step 1: Get your Medicare supplements in place before 65. Read Medicare Enrollment: The Mistakes I Made So You Don't Have To before your initial enrollment window opens. The open enrollment period (when you turn 65 and Part B begins) is when you have guaranteed issue rights for Medigap — no medical underwriting. After this window, insurers can reject you or charge more based on health.

Step 2: Maximize your HSA before 65. Health Savings Accounts let you save pre-tax money that grows tax-free and can be used tax-free for medical expenses. After 65, you can use HSA funds for any purpose (not just medical), though non-medical withdrawals are taxed as income. The HSA is the best triple-tax advantage account available — maximize it in your working years if you're on a high-deductible plan.

Step 3: Address long-term care before 65. LTCI and hybrid policies get more expensive (and harder to qualify for) with each passing year. If you're 60–63 and haven't thought about this, think about it now.

Step 4: Budget explicitly for the gaps. Most retirement planning software has a healthcare cost input. Use a number that reflects reality — I use $18,000/year for a couple in base healthcare costs (premiums + dental + vision + hearing), plus a separate LTC reserve.

The Bottom Line

Medicare is not health insurance that "takes care of everything." It's health insurance that covers most major medical needs but has four meaningful gaps — dental, vision, hearing, and long-term care — that will cost a typical couple $300,000–500,000 over a 20-year retirement.

Budget for it. Plan for it. Don't assume the gaps are small.

This article is for educational purposes and does not constitute financial or insurance advice. Coverage and costs vary by location, health status, and plan. Consult a licensed insurance professional for advice specific to your situation.