Why Original Medicare + Medigap Still Leaves Gaps—and What to Do About It
Scenario: You have Medicare Part A and B and bought a Medigap plan to handle coinsurance, deductibles, and copays. But despite that combo, you’re still at risk of major out-of-pocket costs from things Medicare doesn’t cover—like long-term care or dental. These gaps can erode your retirement savings quickly if you don’t plan ahead.
Long-Term Care Insurance
Covers nursing home, assisted living, or home care when you can’t do basic daily tasks.
Key stat: 70% of people age 65+ will need long-term care.
- ✔ Protects retirement savings from $100K+ care costs
- ✔ Pays for care not covered by Medicare
- ✘ Premiums can be high
- ✘ Underwriting can be strict if you wait too long
Who Needs It: Anyone over 55 with savings they want to protect or no one to care for them.
Who Doesn’t: People with very low income/assets (Medicaid may cover them).
Also Consider: Long-Term Care Annuities or Hybrid Life + LTC Insurance if traditional coverage is too expensive.
Dental, Vision, and Hearing Insurance
Fills the routine care gap Medicare ignores.
Key stat: Medicare pays $0 toward dental, vision, or hearing services.
- ✔ Covers cleanings, fillings, glasses, exams, and hearing aids
- ✔ Low monthly cost
- ✘ Usually capped annual benefits (e.g., $1,500/year for dental)
- ✘ May require waiting periods for major services
Who Needs It: Anyone who expects to need dental work, wears glasses, or uses hearing aids.
Who Doesn’t: Those with minimal ongoing needs who prefer to pay cash.
Hospital Indemnity Insurance
Pays cash for each day you’re hospitalized.
Key stat: Even Medigap plans may leave small per-day gaps if you’re admitted often.
- ✔ Helps with unexpected hospital stays
- ✔ Pays cash directly to you
- ✘ Overlaps with some Medigap plans—choose carefully
- ✘ May not be worth it if you’re very healthy
Who Needs It: People with chronic conditions or frequent hospital stays.
Who Doesn’t: People with Plan G or N who rarely use hospital services.
Helpful Add-on: Annuities With Guaranteed Lifetime Withdrawal Benefits (GLWBs)
Use a fixed index annuity to create income that increases over time and won’t run out—even if you need long-term care or your investments shrink.
- ✔ Pays you income for life
- ✔ Helps cover care costs if insurance isn’t enough
- ✘ Limited access to the lump sum once withdrawals start
Our Advice on Medicare and Medigap Coverage Gaps in Retirement
One of the biggest mistakes retirees make when shopping for Medicare and Medigap is assuming that once they add a Medigap policy, all of their healthcare-cost problems are basically solved.
They aren’t.
Medigap can do an excellent job filling many of the deductibles, copayments, and coinsurance gaps left by Original Medicare. But there are still several major expenses retirees need to plan for separately, particularly long-term care, dental, vision, hearing, and other out-of-pocket healthcare costs.
Long-Term Care Is the Gap That Can Hurt the Most
This is probably the biggest misunderstanding.
Roughly 70% of people turning 65 are expected to need some form of long-term services and support during their lifetime. That doesn’t mean 70% will live permanently in a nursing home. It means a significant percentage of retirees will eventually need some combination of home healthcare, assisted living, adult care, or nursing-home care.
And Medicare generally does not pay for ongoing custodial long-term care.
Medicare can cover certain short-term skilled nursing and home-health services when specific requirements are met. That’s very different from paying for years of assistance because you can no longer independently handle activities such as bathing, dressing, eating, or transferring.
That’s where retirees can get burned.
Many people assume, “If Medicare doesn’t pay for it, Medicaid will.”
Medicaid can pay for long-term care, but qualifying for Medicaid is completely different from qualifying for Medicare. Medicaid is means-tested, and eligibility rules involving income, assets, transfers, and spend-down requirements vary by state.
You generally can’t accumulate a substantial retirement portfolio, decide you want Medicaid to pay for your long-term care, and simply enroll.
Depending on your financial situation and state rules, you may have to spend a significant amount of your own money on care before becoming financially eligible.
That’s the problem.
You could spend 30 or 40 years accumulating your IRA, 401(k), savings, investments, and other assets with the goal of enjoying retirement and eventually leaving something to your children. Then a prolonged long-term-care event can consume a substantial portion of those assets in only a few years.
Nursing-home care can easily cost more than $100,000 per year in many parts of the country, and costs continue to rise.
That’s why long-term care needs to be addressed separately from Medicare and Medigap.
Depending on the situation, solutions can include traditional long-term care insurance, hybrid life insurance with long-term-care benefits, life insurance with chronic illness or LTC riders, and certain annuities offering long-term-care benefits.
Dental, Vision, and Hearing Are Lifestyle Decisions Too
Original Medicare generally doesn’t provide broad coverage for routine dental care, routine eye exams and eyeglasses, or hearing aids.
That’s another area where retirees need to decide how much risk they want to retain themselves.
Some people would rather save the premium and pay dental, vision, and hearing expenses out of pocket. There’s nothing wrong with that if you have enough savings and you’re comfortable taking that risk.
But I look at retirement healthcare a little differently.
One of the things you’re buying with insurance is predictability.
If you’re financially comfortable enough to afford supplemental dental, vision, or hearing coverage, you may prefer paying a predictable monthly premium instead of saving a relatively small amount every month and occasionally getting hit with a large unexpected bill.
You know what you’re paying. You understand what the policy covers. And you can build those premiums directly into your retirement budget.
For retirees living on a very limited fixed income, paying additional premiums may not make sense. But for someone with adequate retirement income and assets, additional insurance can sometimes be less about finding the absolute cheapest solution and more about making healthcare expenses predictable.
Hospital Indemnity Insurance Can Fill Another Type of Gap
Hospital indemnity insurance works differently.
Medicare and Medigap can provide substantial protection against covered inpatient hospital expenses. So I wouldn’t describe hospital indemnity insurance as something everyone needs because Medicare won’t cover a hospital stay.
That’s not accurate.
Instead, hospital indemnity insurance can provide additional cash benefits when you’re hospitalized, depending on the policy.
That money can help offset deductibles, copayments, transportation, meals, household expenses, or other costs that may arise during a hospitalization and recovery.
Whether you need it depends heavily on your Medicare coverage.
Someone with comprehensive Original Medicare and a strong Medigap plan may have relatively little exposure to inpatient cost-sharing and therefore may not get much value from another insurance premium.
Someone with larger potential out-of-pocket exposure may find it more useful.
Again, it comes back to the same question:
Do you want to self-insure the risk, or would you rather pay a predictable premium to transfer some of that risk to an insurance company?
Neither answer is automatically right for everybody.
Guaranteed Retirement Income Can Make Healthcare Planning Easier
This is also where annuities can fit into the overall retirement strategy.
For me, retirement planning should create as much predictability and consistency as reasonably possible.
I want money coming in automatically to pay for the expenses going out.
Social Security might cover one portion of the budget. A pension might cover another. And an annuity with a guaranteed lifetime withdrawal benefit can potentially create another predictable stream of retirement income that lasts for life.
Now you’re able to say:
My Medicare premium is this.
My Medigap premium is this.
My long-term-care insurance costs this.
My dental, vision, or hearing coverage costs this.
My housing and other essential expenses cost this.
And I have predictable retirement income arriving every month to help cover those expenses.
That’s very different from entering retirement with a pile of investments and simply hoping market performance, withdrawals, medical expenses, and longevity all cooperate.
The annuity isn’t paying your medical bills directly. Its job is to create guaranteed cash flow that can help support the lifestyle and insurance premiums you’ve built into your retirement plan.
The Goal Isn’t to Buy Every Insurance Policy Available
I’m not saying every retiree needs Medicare, Medigap, long-term-care insurance, dental insurance, vision insurance, hearing insurance, hospital indemnity insurance, life insurance, and an annuity.
That could be unnecessary and expensive.
The point is to identify the risks that Medicare and Medigap don’t eliminate and then decide which risks you’re financially comfortable keeping and which ones you want to transfer to an insurance company.
For someone with very limited assets, the strategy may be completely different from someone retiring with $1 million, $2 million, or $5 million.
But if you’ve accumulated substantial savings, protecting your retirement isn’t only about getting the cheapest Medicare plan.
It’s about designing a healthcare and retirement-income strategy where a major illness, long-term-care event, or unexpected bill doesn’t destroy the financial plan you spent decades building.
If you want to compare Medicare-related supplemental coverage, long-term-care insurance, life insurance, or annuity income options, The Annuity Expert can help you compare coverage and quotes at no cost and with no obligation.
Bottom Line
Medicare and Medigap are a strong base—but they don’t protect against everything. Pair them with long-term care coverage, dental, vision, and hearing insurance, and possibly a hospital indemnity plan or annuity to stay fully covered.
Contact The Annuity Expert’s financial advisors and insurance agents for free quotes and comparisons on the best coverage for your needs. Don’t leave your future exposed—our agents will help you find the right fit with no obligation.
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