What Medicare Doesn't Cover in Retirement

The principle: Medicare is the foundation, not the whole house

Medicare is valuable coverage, and for most people it is the core of retirement healthcare. But it was never designed to pay for everything. Planning for the gaps (premiums, cost-sharing, services that are not covered and long-term care) turns unpleasant surprises into line items in a budget.

What Medicare costs in 2026

The Centers for Medicare & Medicaid Services (CMS) publishes new amounts every autumn. For 2026:

Two features of Original Medicare matter more than any single number. First, Medicare.gov states plainly that there is no yearly limit on what you pay out of pocket in Original Medicare unless you have supplemental coverage. Second, the 20% coinsurance applies to Part B services with no cap. That is the main job of supplemental coverage.

Prescription drugs (Part D)

Drug plans set their own premiums. For 2026, Medicare.gov says no plan's deductible may exceed $615, and once your out-of-pocket spending on covered Part D drugs reaches $2,100 in the year, you pay nothing for covered drugs for the rest of that year. For 2027 the threshold rises to $2,400.

Higher-income premiums (IRMAA)

If your modified adjusted gross income is above certain levels, you pay an income-related monthly adjustment amount (IRMAA) on top of the Part B and Part D premiums. For 2026, Social Security uses your tax return from two years earlier (generally 2024). The adjustment starts above $109,000 for individual filers and $218,000 for joint filers, and the total Part B premium ranges from $284.10 to $689.90 a month depending on income.

A worked example: Ruth and Sam's first year

Assumptions (hypothetical): married, filing jointly; 2024 modified adjusted gross income of $230,000 because of a one-time business sale; both enrolled in Original Medicare and a Part D plan. A medical year with $30,000 of Medicare-approved Part B charges for one spouse is used to show the coinsurance exposure without supplemental coverage.

Two lessons follow. The IRMAA is tied to income two years earlier, so a one-time spike can raise premiums later. If income later drops because of a qualifying life-changing event, such as stopping work, SSA allows you to request a new decision using form SSA-44. And without supplemental coverage, cost-sharing in a heavy medical year can run into thousands of dollars, with no annual cap.

What Original Medicare does not cover

According to Medicare.gov, items and services Original Medicare does not cover include:

• Most dental care, such as routine cleanings, fillings, extractions and dentures
• Eye exams for prescription eyeglasses
• Hearing aids and exams for fitting them
• Routine physical exams
• Non-medical long-term care (custodial care)
• Generally, medical care outside the U.S.

Some Medicare Advantage plans offer extra benefits for vision, hearing and dental services; coverage and limits vary widely by plan.

Medigap, Medicare Advantage and Part D compared

Neither choice is right for everyone. People who travel, want broad provider choice or expect significant care often value Medigap's predictability. Others prefer the lower premiums and extras of some Medicare Advantage plans and are comfortable with networks. You cannot use a Medigap policy alongside a Medicare Advantage plan.

Enrollment timing pitfalls

• Initial Enrollment Period. Your seven-month window starts three months before the month you turn 65 and ends three months after it.
• Part B late penalty. Without other qualifying coverage, the penalty is 10% of the standard premium for each full 12-month period you could have enrolled but didn't, usually for as long as you have Part B. Delaying Part B is generally safe only with qualifying current employer coverage; check the rules before you rely on it.
• Part D late penalty. Going 63 days or more without creditable drug coverage after your initial period can add 1% of the national base premium for each uncovered month, permanently.
• Medigap Open Enrollment. Your best window is the six months that start the first month you are 65 or older and enrolled in Part B. Afterwards, insurers in most states may charge more or decline coverage based on health.
• Annual Open Enrollment. Each year from October 15 to December 7 you can change Medicare Advantage and Part D plans for the following year. Plans change their costs and drug lists every year, so it is worth reviewing.

People thinking about retiring abroad face an additional trap with late enrollment penalties; see our case study The Expat Medicare Trap. If you plan to retire before 65, the bridge to Medicare is a separate problem; see Navigating Early Retirement ACA Premium Tax Subsidies.

Planning for long-term care

Medicare.gov is direct: Medicare does not pay for long-term care, meaning help with everyday activities such as bathing, dressing and eating, whether at home, in assisted living or in a nursing home. Most health insurance, including Medigap, does not either. Medicare covers skilled nursing facility care only in limited, short-term circumstances.

Ways people plan for long-term care include:

• Self-funding from savings, home equity or a dedicated reserve.
• Long-term care insurance, either traditional policies or life insurance and annuity products with long-term care features. Premiums, benefits and underwriting vary considerably.
• Medicaid, which can pay for long-term care for people who meet their state's income and asset rules.
• Family caregiving, which has real costs in time, income and health for the caregiver.

There is no single right answer. The WealthLanding U.S. healthcare and long-term care strategy page walks through these options in more depth.

What you can do

• Mark your Initial Enrollment Period dates and your Medigap Open Enrollment window on a calendar.
• Budget for Part B premiums, a drug plan and either Medigap or Medicare Advantage costs, for each spouse.
• Check whether income two years before a given year could trigger IRMAA, especially around large sales or Roth conversions.
• Set aside a reserve for dental, vision and hearing costs.
• Decide how you would pay for long-term care if it were needed, and discuss it with family.
• Use free counseling from your state's SHIP (State Health Insurance Assistance Program) and compare plans each autumn.

Put this principle to work

These WealthLanding tools and guides from the Retirement Lab help you apply this principle to your own numbers.

• Navigating Early Retirement ACA Premium Tax SubsidiesHow to bridge health coverage if you retire before 65.
• U.S. Healthcare & LTC StrategyPlan coverage transitions and long-term care options.
• The Expat Medicare TrapWhy retiring abroad doesn't avoid Medicare's late-enrollment penalties.

Common mistakes

Assuming Medicare covers everything

It does not cover most dental, routine vision, hearing aids or long-term custodial care, and Original Medicare has no out-of-pocket cap.

Missing the enrollment window

Late enrollment penalties can last for life. COBRA does not extend your window: Medicare.gov explains that you have up to 8 months after you stop working (or lose employer coverage, if that happens first) to sign up for Part B without a penalty, whether or not you choose COBRA.

Choosing a plan on premium alone

A low-premium plan can have higher cost-sharing, narrower networks or a drug list that does not fit you.

Forgetting the two-year lookback

IRMAA uses income from two years earlier, so planning a big sale or conversion at 63 can affect premiums at 65.

When individual circumstances change the answer

• Still working at 65 with large-employer coverage: the timing of Part B may differ. Confirm with the employer and Medicare.
• Limited income and assets: Medicare Savings Programs, Extra Help and Medicaid can reduce costs significantly.
• Living part of the year elsewhere or abroad: networks and coverage outside the U.S. matter more.
• State rules: some states offer broader Medigap rights than federal law.

Questions readers ask

What is the Medicare Part B premium for 2026?

CMS set the 2026 standard Part B premium at $202.90 a month, with a $283 annual deductible. People with higher incomes pay more through IRMAA, up to $689.90 a month in 2026.

Does Medicare pay for long-term care?

No. Medicare.gov states that Medicare doesn't pay for long-term (custodial) care, and most health insurance, including Medigap, doesn't either. Options include savings, long-term care insurance, Medicaid for those who qualify, and family care.

Is Medigap or Medicare Advantage better?

Neither is best for everyone. Original Medicare with Medigap generally offers broad provider choice and predictable costs for a higher premium. Medicare Advantage plans often have lower premiums, networks, possible prior authorization, a yearly out-of-pocket limit and sometimes extra benefits. Compare your doctors, drugs, travel and budget.