Medicare Exclusions: Five Coverage Gaps Retirees Face and Their Costs — What Doesn'T

Original Medicare is a federal health insurance program for Americans 65 and older, covering hospital stays, doctor visits, and some skilled nursing care through Part A (hospital insurance) and Part B (medical insurance).¹ However, what Medicare doesn't cover creates significant out-of-pocket exposure for retirees, including dental, vision, hearing, long-term care, and overseas medical expenses that can cost thousands annually.

What Medicare Actually Pays For (And What It Doesn't)

Medicare covers hospital stays, doctor visits, and some skilled nursing care, but what Medicare doesn't cover creates significant out-of-pocket exposure for retirees. Understanding these coverage gaps is essential for accurate retirement healthcare budgeting — and for Smart Money After 60 readers planning their financial futures with precision.

Original Medicare (Part A and Part B) covers approximately 60% of retiree health care costs, leaving 40% uncovered without supplemental insurance.² Part A covers inpatient hospital stays, skilled nursing facility care (limited), hospice, and some home health care. Part B covers doctor services, outpatient care, preventive services, and medical equipment.

What Medicare does not cover includes routine dental care, vision exams and eyeglasses, hearing aids and exams, long-term custodial care, medical care outside the United States, and most prescription drugs (covered separately under Part D). Original Medicare also imposes no annual out-of-pocket cap, meaning beneficiaries face unlimited potential costs for covered services.³

The Part B standard monthly premium is $185 in 2025 (the same as 2024's standard premium), with additional IRMAA surcharges for higher-income beneficiaries.⁴ These premiums cover only the services Medicare explicitly includes — everything else falls to the beneficiary or requires separate insurance.

Dental Coverage Gap: Typical Out-of-Pocket Costs Retirees Face

Medicare explicitly excludes routine dental care, including cleanings, fillings, extractions, dentures, and dental implants.¹ A retiree needing a single dental implant might pay $3,000 to $6,000 out of pocket.⁵ A full set of dentures typically runs $1,500 to $4,000.⁶ Annual cleanings and exams cost $300 to $600 without insurance.⁵

Consider a retiree who needs a root canal and crown on a molar. A typical root canal costs $800 to $1,500, the crown adds $1,000 to $2,500, and the initial exam and X-rays cost $150 to $300, making total out-of-pocket exposure for one tooth between $1,950 to $4,300.⁵

Medicare Advantage plans sometimes include dental benefits, but coverage limits are typically $1,000 to $2,000 per year — insufficient for major procedures. Standalone dental insurance costs roughly $30 to $60 per month² but often has waiting periods and annual maximums.

Vision and Hearing: The Overlooked Expenses Medicare Ignores

Medicare does not cover routine vision exams, eyeglasses, or contact lenses.¹ A comprehensive eye exam costs $150 to $300. A standard pair of prescription glasses typically runs $200 to $600. Progressive lenses or specialized coatings push costs higher. Cataract surgery is covered, but the premium intraocular lenses that correct astigmatism or presbyopia cost, for example, $1,000 to $2,500 per eye out of pocket.

Hearing aid fittings and follow-up adjustments add roughly $200 to $500 annually, depending on the provider and the level of ongoing care needed.⁶

A retiree needing both glasses and hearing aids faces thousands of dollars in out-of-pocket costs in a single year — entirely uncovered by Medicare.

Long-Term Care: Why Medicare's 100-Day Limit Creates Major Exposure

Medicare covers skilled nursing facility care only after a qualifying three-day inpatient hospital stay, and only for up to 100 days per benefit period.⁶ Days 1 through 20 are fully covered. Days 21 through 100 require a $204 per day co-pay in 2025.⁶ After day 100, Medicare pays nothing.

Custodial care — help with bathing, dressing, eating, and toileting — is never covered by Medicare.¹ This is the most common type of long-term care. The average annual cost for a private nursing home room is $116,800, nearly double the average Social Security benefit.⁵

Suppose a retiree needs custodial care for three years. At $116,800 per year⁷, total exposure is $350,400. Medicare covers none of it. Long-term care insurance, if purchased before age 65, can offset these costs, but fewer than 10% of retirees carry it³.

Foreign Travel and Medical Care Outside the US

Medicare does not cover medical care received outside the United States, except in very limited emergency circumstances near the Canadian or Mexican border.⁸ A retiree who suffers a heart attack in Europe faces the full cost of treatment — potentially $20,000 to $50,000 for a hospital stay.

Medicare also excludes ambulance transport from foreign hospitals, prescription drugs purchased abroad, and follow-up care arranged overseas. Even routine medical needs during travel — a doctor visit for an ear infection, a prescription refill — are entirely out of pocket.

Travel medical insurance policies typically cost between $50 and $200 per trip² and cover emergency care, evacuation, and repatriation. Medicare Supplement Plan C, D, F, G, M, and N provide limited foreign travel emergency coverage: 80% of costs up to a $50,000 lifetime maximum. Retirees traveling internationally should verify their coverage before departure.

Prescription Drug Coverage Gaps Under Part D

Medicare Part D covers prescription drugs, but the coverage has structural gaps. The Part D benefit includes a deductible (subject to annual adjustment; $590 in 2025), then 25% coinsurance up to the initial coverage limit. The coverage gap (donut hole) has been effectively closed by the Inflation Reduction Act, but beneficiaries still pay 25% of drug costs during this phase².

The most significant gap is formulary exclusions. Part D plans maintain formularies — lists of covered drugs — and can exclude specific medications or require prior authorization. A retiree taking a brand-name drug not on the formulary might pay full retail price, which for specialty drugs can exceed $10,000 per month.

Retirees should review Part D formularies annually during open enrollment. Drug costs change, plans adjust formularies, and a plan that worked one year may not cover needed medications the next.

How to Budget for Medicare Coverage Gaps in Retirement

A realistic healthcare budget for a 65-year-old couple retiring in 2025 should account for Medicare premiums, supplemental insurance, and out-of-pocket costs for uncovered services. For a typical individual, the total can range from $7,000 to $12,000 per year, depending on health status and coverage choices⁷.

This budget excludes long-term care costs if uninsured. A three-year nursing home stay at roughly $117,000 per year⁷ would deplete over $350,000 from retirement savings — a risk that demands explicit planning.

Your Next Step

Review your current Medicare coverage and identify which of the five coverage gaps applies to your situation. If you have dental, vision, or hearing needs in the next 12 months, get cost estimates from three providers and add them to your retirement budget. For long-term care, request quotes for a policy with a three-year benefit period and a 90-day elimination period — the most cost-effective structure for most retirees. If you travel internationally, purchase a travel medical insurance policy before your next trip. Document your findings in a healthcare expense worksheet and revisit it annually during Medicare open enrollment.