Understanding Medicare Finance: What It Covers and What It Doesn’t
Understanding Medicare Finance: What It Covers and What It Doesn’t
Medicare is an important part of healthcare planning, especially for those approaching retirement. But understanding how it’s financed—and what it actually covers—can help you avoid unexpected expenses.
How Medicare Is Funded
Medicare is primarily funded by payroll taxes paid by workers and employers, along with monthly premiums paid by beneficiaries for certain parts of coverage, like Part B and Part D.
What Medicare Covers
Medicare Part A typically covers hospital stays, skilled nursing care, and some home health services. Part B covers outpatient care, doctor visits, and preventive services. Additional plans like Medicare Advantage (Part C) and prescription drug coverage (Part D) offer more options.
What Medicare Doesn’t Cover
Medicare generally doesn’t cover routine dental care, vision exams, hearing aids, or long-term care in nursing homes. Many people choose to buy supplemental insurance (Medigap) or other plans to help cover these gaps.
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Why It Matters
Understanding the limits of Medicare coverage is essential for financial planning. Reviewing options each year and considering supplemental insurance can help reduce unexpected costs and protect your savings.