Most new retirees are shocked by their first out-of-pocket medical bill. Here is exactly what Medicare leaves out—and your four best options for filling the gaps before they cost you thousands.

The Assumption That Costs Retirees Thousands

For decades, working Americans hear the same thing: when you turn 65, you will have Medicare. And for most people, that sounds like a finish line—the moment when healthcare costs finally stop being a worry.

Then the bills start arriving.

The reality is that Medicare, as comprehensive as it is, was never designed to cover everything. It has significant holes—some of them enormous—that catch retirees completely off guard. Dental work. Hearing aids. Long-term care. Prescription drugs. Overseas medical emergencies. The list of what Medicare does not pay for is long, and the costs that fall through those gaps can add up to thousands of dollars every single year.

According to the Employee Benefit Research Institute, the average retired couple will need an estimated $315,000 in savings just to cover out-of-pocket healthcare costs in retirement—and that figure does not include the cost of long-term care, which Medicare barely touches.

This article breaks down exactly what each part of Medicare covers, where the gaps are, and the four main strategies retirees use to protect themselves. Whether you are newly enrolled, approaching 65, or helping a parent navigate their coverage, this is information you cannot afford to skip.

Part One: A Quick Primer on How Medicare Is Structured

Before we get into the gaps, it helps to understand what Medicare actually consists of. Many retirees are surprised to learn that Medicare is not a single program — it is a collection of parts, each covering a different category of care.

If you have Original Medicare (Parts A and B only), you are exposed to nearly all of the gaps described below. Parts C and D—and supplemental insurance products like Medigap—exist specifically to address those exposures.

Part Two: What Medicare Part A Does Not Cover

Part A is often called hospital insurance, and most people qualify for it premium-free if they or their spouse worked and paid Medicare taxes for at least 10 years. But free does not mean unlimited.

Long-Term Custodial Care—The Biggest Gap in All of Medicare

This is the most consequential coverage gap in the entire Medicare program, and the one that surprises retirees the most. Medicare Part A will pay for skilled nursing facility care—but only under very specific conditions and only for a limited time.

Here is how it actually works: Medicare will cover skilled nursing care after a qualifying hospital stay of at least three days, but only for care that requires skilled medical professionals such as physical therapists or registered nurses. After 20 days, you begin paying a significant daily copayment. After 100 days, Medicare pays nothing.

Critical Gap: Custodial Care Is Not Covered: Medicare does NOT pay for custodial care — help with daily activities like bathing, dressing, eating, or using the bathroom. The average cost of a private room in a nursing home in the U.S. is more than $9,700 per month. Assisted living facilities, memory care units, and adult day care programs are also not covered by Medicare. This gap is the primary reason long-term care insurance exists.

Dental Care

Original Medicare does not cover routine dental care — no cleanings, no X-rays, no fillings, no crowns, no dentures, and no extractions unless they are medically necessary as part of a covered procedure. For retirees, who often face significant dental expenses as they age, this can mean thousands of dollars paid entirely out of pocket.

Vision Care

Medicare Part B covers a yearly eye exam for diabetic retinopathy and will pay for cataract surgery with corrective lenses afterward. But routine eye exams, eyeglasses, and contact lenses are not covered. For many seniors who develop presbyopia, cataracts, or age-related macular degeneration, vision costs can mount quickly.

Hearing Aids

Hearing loss affects roughly two-thirds of Americans over the age of 70, yet Medicare does not cover hearing aids or the exams to fit them. Hearing aids can cost anywhere from $1,000 to $7,000 per pair, and most people need to replace them every three to five years.

Other Part A Gaps

• The first three pints of blood you receive in a hospital stay
• Private-duty nursing during a hospital stay
• Private hospital rooms (unless medically necessary)
• Personal comfort items during a hospital stay

Part Three: What Medicare Part B Does Not Cover

Part B covers outpatient care—doctor visits, lab tests, preventive services, and medically necessary equipment. In 2026, the standard Part B premium is $185.00 per month, though higher earners pay more through IRMAA (Income-Related Monthly Adjustment Amount) surcharges. But even with Part B, there are substantial gaps.

The Part B Deductible and Coinsurance

Many retirees are surprised to learn that even when Part B covers a service, it does not cover all of it. After meeting your annual deductible of $257 in 2026, Medicare Part B typically pays 80% of the approved amount. You are responsible for the remaining 20%, with no out-of-pocket maximum under Original Medicare alone.

No Out-of-Pocket Maximum Under Original Medicare: One of the most alarming features of Original Medicare (Parts A and B without supplemental coverage) is that there is no cap on what you could owe in a single year. If you face a serious illness requiring multiple hospitalizations, specialist visits, and outpatient treatments, your 20% coinsurance responsibility could reach tens of thousands of dollars. This is the primary reason financial advisors strongly recommend Medigap (Medicare Supplement Insurance) for most retirees.

Other Part B Gaps

• Routine dental, vision, and hearing (same as Part A)
• Cosmetic procedures and surgery
• Most prescription medications taken at home
• Medical care received outside the United States (with very narrow exceptions)
• Acupuncture (except for chronic low back pain under certain conditions)
• Long-term care in nursing homes or assisted living facilities
• Routine foot care (except for diabetes-related conditions)

Part Four: The Long-Term Care Gap—Why It Keeps Financial Advisors Up at Night

Of all the coverage gaps in Medicare, none carries more financial risk for retirees than the near-total absence of long-term care coverage. This deserves its own extended discussion because the numbers involved are staggering and the planning implications are enormous.

The U.S. Department of Health and Human Services estimates that roughly 70% of Americans turning 65 today will need some form of long-term care during their lifetimes.

The average duration of care is about three years, but for many individuals—particularly those with Alzheimer’s disease, Parkinson’s, or other chronic conditions—the need can last a decade or more.

Medicare pays for none of these on a long-term custodial basis. Medicaid does—but only after you have spent down nearly all of your assets to qualify. For retirees who have spent a lifetime building savings, that prospect can be devastating.

Long-term care insurance is the most direct solution, but it has its own complexities: premiums have risen sharply in recent years, and it is ideally purchased in your mid-50s to early 60s, before health conditions make coverage difficult or impossible to obtain. Hybrid life insurance policies that include a long-term care benefit have become an increasingly popular alternative.

Part Five: Your Four Best Options for Filling the Gaps

The good news is that the gaps in Medicare are well known, and an entire ecosystem of insurance products and programs has been built specifically to address them. Here are the four primary strategies retirees use, and what each one is best suited for.

Option 1: Medicare Supplement Insurance (Medigap)

Medigap plans are sold by private insurance companies and are designed to work alongside Original Medicare—paying for costs that Medicare leaves behind, such as deductibles, coinsurance, and copayments.

In most states, Medigap plans are standardized and labeled with letters: Plan G and Plan N are currently the most popular choices for new enrollees.

What Medigap Typically Covers: Medicare Part A coinsurance and hospital costs (up to an additional 365 days). Medicare Part B coinsurance or copayment (usually 80% of the remaining 20%). Part A deductible (depending on plan). Foreign travel emergency care (Plans C, D, F, G, M, N — up to plan limits).  Skilled nursing facility coinsurance. Note: Medigap does NOT cover dental, vision, hearing, or long-term care

The best time to enroll in Medigap is during your six-month Medigap Open Enrollment Period, which begins the month you turn 65 and are enrolled in Part B. During this window, insurers cannot deny you coverage or charge you more based on your health history. Outside this window, medical underwriting applies in most states.

Monthly premiums for Medigap plans vary widely by plan type, insurer, age, and location — generally ranging from $100 to $400+ per month. For retirees who want maximum financial predictability and see many doctors, Medigap is often the most cost-effective long-term solution.

Option 2: Medicare Advantage (Part C)

Medicare Advantage plans are an alternative to Original Medicare — rather than supplementing it, they replace Parts A and B entirely and are administered through private insurers approved by Medicare. Most Medicare Advantage plans also include Part D drug coverage and frequently bundle in dental, vision, and hearing benefits that Original Medicare does not cover.

Medicare Advantage plans often have lower monthly premiums than Medigap — some plans have $0 premiums — but they typically use provider networks (HMO or PPO structures), meaning your choice of doctors and hospitals may be restricted. They also commonly require prior authorization for certain procedures and may have higher out-of-pocket costs if you need significant care.

Medicare Advantage works best for retirees who are relatively healthy, prefer a structured plan with bundled benefits, and are comfortable staying within a network of providers. It may be less suitable for retirees with complex medical needs who want unrestricted access to specialists.

Option 3: Medicare Part D (Prescription Drug Coverage)

Original Medicare does not cover most prescription drugs you take at home — that gap is addressed by Part D plans, which are purchased separately through private insurers or included in a Medicare Advantage plan. In 2026, significant changes have continued rolling in from the Inflation Reduction Act, including a $2,000 annual out-of-pocket cap on Part D drug costs — a major improvement for retirees who take expensive medications.

If you do not enroll in Part D when you are first eligible and do not have other creditable drug coverage, you may face a late enrollment penalty for as long as you have Medicare. Even if you currently take few medications, enrolling in a low-premium Part D plan at 65 is generally advisable.

Option 4: Long-Term Care Insurance

Because Medicare provides virtually no coverage for custodial long-term care, long-term care insurance remains an important planning tool for many retirees. A traditional long-term care policy pays a daily or monthly benefit when you need help with activities of daily living — typically two or more of bathing, dressing, eating, continence, toileting, or transferring.

The challenge: traditional long-term care insurance premiums have increased substantially over the years, and many insurers have exited the market. Hybrid products — such as life insurance policies with a long-term care rider — have become a popular alternative because they guarantee a death benefit even if long-term care is never needed.

Financial planners generally recommend evaluating long-term care coverage options in your mid-50s to early 60s, when premiums are lower and health qualifications are easier to meet. Waiting until your late 60s or 70s can significantly increase costs or make coverage unavailable.

Part Six: What the Gaps Are Actually Costing Retirees Each Year

To understand the full financial picture, it helps to look at what retirees with different coverage levels typically pay out of pocket each year for healthcare — not including long-term care.

These figures do not include dental, vision, or hearing costs, which can add $500 to $3,000 or more annually depending on individual needs. And they do not touch long-term care, where a single year in a nursing home can easily exceed $100,000.

The bottom line: retirees who understand their Medicare gaps and plan accordingly spend predictable, manageable amounts on healthcare. Those who rely on Original Medicare alone — assuming it covers everything — can face sudden, devastating expenses with no financial safety net.

Free Help Is Available: The SHIP Program

SHIP — State Health Insurance Assistance Programs: Every state has a SHIP program staffed by trained counselors who provide free, unbiased Medicare guidance. SHIP counselors can help you compare Medigap plans, Medicare Advantage options, and Part D drug plans. They do not sell insurance and receive no commissions — their only job is to help you understand your options. To find your local SHIP program, visit shiphelp.org or call 1-800-MEDICARE (1-800-633-4227). This is one of the most underutilized and valuable free resources available to retirees.

The Bottom Line

Medicare is a remarkable program that covers an enormous amount of healthcare for retirees — but it was never designed to cover everything. The gaps it leaves — particularly in dental, vision, hearing, prescription drugs, and long-term care — are real, significant, and costly.

The retirees who fare best financially are the ones who go in with eyes open: who understand what Medicare does and does not cover, who evaluate their supplemental coverage options thoughtfully, and who plan for long-term care well before they need it.

If you are newly enrolled in Medicare or approaching 65, the most important thing you can do right now is not assume you are covered. Take the time to review your options, speak with a SHIP counselor for free guidance, and make sure your coverage matches the realities of what healthcare in retirement actually costs.

Your future self will thank you.

You might also like: The Medicare Costs Most Retirees Don’t See Coming (And How to Budget for Them)

This article is provided for general informational purposes only and does not constitute financial, insurance, or healthcare advice. Medicare rules, premiums, and coverage details are subject to change. Consult a licensed insurance professional or SHIP counselor for guidance specific to your situation.