Are you confident you know what Medicare will and won’t cover once you stop working? Healthcare costs in retirement catch many people off guard, mostly because Medicare covers less than its name suggests. Keep reading to learn where the real gaps sit and what to do about them while you still have time to plan.
What Does Medicare Actually Pay For?
Medicare is split into parts, and each one covers something different. Part A covers hospital stays and is premium-free for most people who have paid Medicare taxes long enough. Part B covers doctor visits and outpatient care, and comes with a monthly premium: $202.90 for most enrollees in 2026, plus a $283 annual deductible. Part D covers prescription drugs through a separate plan you choose.
Some retirees choose Part C, also called Medicare Advantage, instead of Parts A and B. It’s a private insurance alternative that bundles your hospital and medical coverage, often with extras like dental or vision, into a single plan.
Original Medicare (meaning Parts A and B) doesn’t cover routine dental, vision, or hearing care. Some Part C plans offer limited coverage for those, but neither Original Medicare nor Part C covers long-term care, such as an extended nursing home stay or in-home care for daily living needs. That’s where most retirement budgets come up short.
There’s also a timing detail to consider: if your income is high enough in a given year, Medicare can charge a surcharge on top of your Part B and Part D premiums. It’s based on your tax return from two years earlier, so a large one-time withdrawal or Roth conversion today can raise your premiums well after the money is gone. This is a case where individual tax planning before you file, not after, makes a real difference.
Building a Cushion Before You Need It
A health savings account, available if you have a high-deductible health plan before you enroll in Medicare, is one of the few accounts that offers a triple tax benefit: contributions, growth, and qualified withdrawals are all untaxed. Money left in the account carries forward indefinitely, so contributing while you’re still working and healthy builds a cushion you can draw on for premiums, copays, or long-term care costs later.
Long-term care itself deserves its own line in the plan, since it’s the piece Medicare skips almost entirely. Ohio participates in a Long-Term Care Insurance Partnership Program, which allows a qualifying policy to protect a matching dollar amount of your assets if you later need Medicaid to help cover care.
What’s Right for One Retiree Isn’t Right for All
Not everyone needs a long-term care policy. If you have significant assets you’re comfortable spending down, or family members already prepared to provide care, self-funding may be the more practical choice, and premiums on new policies have risen enough in recent years that they aren’t automatically worth it for every household. If you’re retiring with employer-sponsored retiree health coverage, some of the Medicare gaps described above may already be filled, so it’s worth reviewing your specific plan before assuming you need a Medigap policy on top of it.
It’s also worth revisiting how your other coverage fits together. If your household already carries life insurance, for example, retirement is a reasonable time to check whether that coverage still matches your needs.
Retirement Planning in Worthington and Lancaster, OH
Sorting out retirement planning is easier with a second set of eyes, especially when the right move depends on your full financial picture rather than one number in isolation. Royal Oak Financial Group is here to help, with a team of financial experts in Worthington and Lancaster ready to factor healthcare costs into the rest of your retirement plan. Contact us today to get started.
