What Medicare Doesn't Cover in 2026 — And How to Fill the Gaps for a Better Retirement

For most people approaching retirement, Medicare feels like the finish line. You spend 40 years paying into the system, you turn 65, you enroll — and you assume the big stuff is handled.

It isn't. Not entirely.

Medicare is an excellent foundation, but it was never designed to cover everything. And the gaps it leaves behind — some well-known, some surprising — can create thousands of dollars in annual out-of-pocket costs that most retirees never fully anticipated. For a 25- or 30-year retirement, those gaps compound into real money.

This guide covers what Medicare actually covers, what it doesn't, exactly what those gaps cost in 2026, and how to build a strategy that protects your retirement income from healthcare surprises.

First: A Quick Primer on How Medicare Is Structured

Before diving into the gaps, it's helpful to understand what you're actually working with when you enroll. Medicare is divided into distinct parts, each covering different services:

• Part A — Hospital Insurance. Covers inpatient hospital stays, skilled nursing facility care following a qualifying hospital stay, hospice, and limited home health services. Most people pay no monthly premium for Part A if they or their spouse have at least 40 quarters of work history paying Medicare taxes.
• Part B — Medical Insurance. Covers outpatient services, physician visits, preventive care, diagnostic tests, durable medical equipment, and certain home health services. The standard monthly premium for Medicare Part B in 2026 is $202.90, an increase of $17.90 from $185 in 2025. The annual deductible is $283. After the deductible, Medicare pays 80% of approved costs — leaving you responsible for the remaining 20%, with no annual out-of-pocket cap.
• Part C — Medicare Advantage. Private insurance plans that provide at least the same benefits as Parts A and B, often bundled with additional coverage like prescription drugs, dental, vision, and hearing. Medicare Advantage is an alternative to Original Medicare, not a supplement to it.
• Part D — Prescription Drug Coverage. Standalone prescription drug plans that work alongside Original Medicare. Each plan has its own formulary, premiums, deductibles, and cost-sharing structure.
• Medigap (Medicare Supplement Insurance). Private policies that work alongside Original Medicare to cover some or all of the cost-sharing that Original Medicare leaves behind. These are sold by letter (Plan G, Plan N, etc.) and are standardized in most states.

Part 1: What Medicare Does Not Cover

Understanding Medicare's exclusions is the starting point for any realistic retirement healthcare budget. The gaps fall into several distinct categories.

Dental Care

Original Medicare covers dental care only in very narrow circumstances — for example, if a dental procedure is required as part of a broader covered medical procedure. It does not cover routine dental care: no cleanings, fillings, extractions, root canals, crowns, bridges, dentures, or orthodontic work in the vast majority of situations.

For retirees, this is a significant budget item. A single crown can run $1,000 to $2,000. Full dentures can cost $3,000 to $8,000 or more. Implants — which many dentists now consider the standard of care — can run $3,000 to $5,000 per tooth. Without a supplemental dental plan, these costs fall entirely on you.

Vision Care

Original Medicare does not cover routine vision exams, eyeglasses, or contact lenses. It covers a dilated eye exam for patients with diabetes or at high risk for glaucoma, and cataract surgery including one pair of standard glasses. But routine annual eye exams and corrective lenses are out-of-pocket expenses — and vision needs typically become more complex with age.

Hearing Care

Routine hearing exams and hearing aids are not covered by Original Medicare. Hearing loss is one of the most common conditions in older adults. Hearing aids can cost anywhere from $1,500 to $7,000 per pair, and most people need periodic replacements as their hearing changes.

Dental, Vision, and Hearing — The Annual Budget Reality

Taken together, these three categories represent a recurring annual cost for most retirees. A comprehensive dental plan, separate vision coverage, and hearing aid costs can collectively add $2,000 to $5,000 or more per year. Over a 25-year retirement, this is a line item that needs to be planned for explicitly — not treated as a surprise.

Long-Term Care (Custodial Care)

This is the largest and most consequential gap Medicare leaves behind — and the one most likely to derail a retirement plan if not addressed. We cover this in detail in Part 5.

Care Outside the United States

Original Medicare does not cover healthcare received outside the United States and its territories, with very limited exceptions. Emergency medical treatment in a foreign country can result in bills ranging from thousands to tens of thousands of dollars with no Medicare coverage. For retirees who travel internationally or split time abroad, this gap requires specific attention.

Cosmetic Procedures

Elective cosmetic surgery is not covered by Medicare unless it is deemed medically necessary — for example, reconstructive surgery following an accident or mastectomy. Routine cosmetic procedures are entirely out-of-pocket.

Routine Foot Care

Medicare does not cover most routine foot care, including toenail trimming, callus removal, and other podiatric services not related to a systemic medical condition. For patients with diabetes, circulatory conditions, or peripheral neuropathy, some foot care services may be covered — but routine maintenance is not.

Acupuncture, Chiropractic, and Alternative Treatments

Medicare covers acupuncture for chronic low back pain only (up to 12 sessions per year, extendable to 20). Chiropractic coverage is typically limited to manual spinal manipulation. Other alternative and complementary treatments — massage therapy, naturopathy, homeopathy — are generally not covered.

Part 2: The Real Cost of What Medicare Does Cover

Understanding the gaps is important. But so is understanding the cost-sharing that applies to what Medicare does cover — because the out-of-pocket exposure on covered services can be significant, particularly for hospital stays.

Part A Cost Sharing in 2026

• Inpatient hospital deductible: $1,736 per benefit period (not per year — if hospitalized twice in separate benefit periods, you pay this twice)
• Hospital coinsurance days 61–90: $434 per day
• Lifetime reserve days: $868 per day
• Skilled nursing facility coinsurance days 21–100: $217 per day — coverage stops entirely after day 100
• No Part A out-of-pocket maximum. A prolonged hospital stay could generate very large cost-sharing obligations.

Part B Cost Sharing in 2026

After the $283 annual deductible, Medicare pays 80% of the Medicare-approved amount for covered services, while you pay the remaining 20%. There is no out-of-pocket maximum for Part B services under Original Medicare. If you have a complex illness requiring frequent outpatient care, the 20% coinsurance can accumulate significantly.

IRMAA: The Income-Based Premium Surcharge

One of the most impactful — and most overlooked — Medicare costs for higher-income retirees is IRMAA, the Income-Related Monthly Adjustment Amount. IRMAA is a surcharge added to your Part B and Part D premiums when your income exceeds certain thresholds. The critical detail: IRMAA uses a two-year MAGI lookback.

In 2026, IRMAA applies to single filers with income above $109,000 and joint filers with income above $218,000. The monthly Part B premium including income-related adjustments ranges from $284.10 to $689.90 depending on income tier. The Part D IRMAA surcharge adds $14.50 to $91 per month on top of your plan premium.

IRMAA follows a 'cliff' structure — even $1 over an income threshold can trigger a significantly higher monthly premium. The jump from no IRMAA to Tier 1 costs a couple $2,297 per year. From Tier 1 to Tier 2, the additional cost is $3,475. These recur every year your income stays above the threshold.

Important: A Roth conversion, a Required Minimum Distribution, a capital gain from a real estate sale, or any other large income event in a given year can push you over an IRMAA bracket — with premium consequences two years later. This is why Medicare planning and tax planning belong in the same conversation.

Part 3: Medigap vs. Medicare Advantage — Filling the Gaps in Original Medicare

Once you understand what Original Medicare covers and what it doesn't, the next decision is how to fill the cost-sharing gaps. There are two primary approaches, and they work very differently.

Medigap (Medicare Supplement Insurance)

Medigap policies are private insurance plans designed to work alongside Original Medicare by covering some or all of the cost-sharing that Original Medicare leaves behind: deductibles, coinsurance, and copayments. Medigap plans are standardized by letter, with Plan G and Plan N being two of the most commonly purchased.

What Medigap does well:

• Predictable costs. With a comprehensive Medigap plan like Plan G, your out-of-pocket costs for covered Medicare services are largely limited to the annual Part B deductible ($283 in 2026). Hospital coinsurance, the 20% Part B coinsurance, and skilled nursing facility coinsurance are covered.
• Broad provider access. Any provider who accepts Medicare accepts your Medigap plan. No networks, no referral requirements, and no prior authorization for Medicare-covered services. Particularly valuable for retirees who travel or split time between states.
• Stable coverage structure. Unlike Medicare Advantage plans, Medigap policies don't change their core benefits annually. Your premiums may increase, but the coverage structure remains stable.

What Medigap doesn't cover:

Medigap plans cover Medicare cost-sharing — they don't add benefits Medicare itself doesn't cover. Dental, vision, hearing, and long-term care remain out-of-pocket. You'll also need a standalone Part D plan for prescription drug coverage.

Enrollment timing matters: During your Medigap open enrollment period — the six months beginning the month you turn 65 and are enrolled in Part B — insurance companies cannot deny you coverage or charge higher premiums based on your health history. Outside this window, you may be subject to medical underwriting.

Medicare Advantage (Part C)

Medicare Advantage is a fundamentally different approach. Instead of Original Medicare paying claims and a Medigap plan covering cost-sharing, you enroll in a private plan that administers your entire Medicare benefit.

What Medicare Advantage does well:

• Bundled simplicity. Most Advantage plans bundle hospital, medical, and prescription drug coverage into a single plan with a single premium (often $0 or very low). Many include dental, vision, and hearing benefits.
• Annual out-of-pocket maximum. Unlike Original Medicare, Medicare Advantage plans cap your annual out-of-pocket costs for covered in-network services.
• Extra benefits. Some plans include gym memberships, transportation to medical appointments, meal delivery after a hospital stay, and other benefits not available under Original Medicare.

The trade-offs:

• Provider networks. Most Advantage plans are HMOs or PPOs with defined provider networks. Seeing out-of-network providers costs more or may not be covered at all.
• Prior authorizations. Medicare Advantage plans often require prior authorization for certain services and referrals to specialists — adding friction that Original Medicare doesn't.
• Annual variability. Medicare Advantage plans can shift annually — premiums, networks, and copays. A plan that works well this year may look very different next year.
• Geographic limitations. In rural areas or smaller markets, plan options may be limited and provider networks thin.

The Decision Framework

Medigap typically makes more sense if: you have chronic conditions requiring regular specialist visits; you travel frequently or split time between states; you have established specialist relationships you want to preserve; or you prefer predictable known costs over potentially lower costs with more variability.

Medicare Advantage typically makes sense if: you're generally healthy; you have a strong local plan in your area; you value the extra benefits bundled into a single plan; you're comfortable staying within a network; and the premium savings relative to Medigap are meaningful to your budget.

Practical consideration: It is generally easier to move from Original Medicare + Medigap to Medicare Advantage than in the reverse direction. If you start with Medicare Advantage and later want to switch to Medigap, you may face medical underwriting — which can be challenging if your health has declined. Think of the initial decision as a long-term choice.

Part 4: Prescription Drug Coverage and the 2026 Updates

Part D prescription drug coverage is complex and worth understanding carefully, especially given meaningful changes to how out-of-pocket drug costs work in 2026.

Beginning in 2026, the Part D program includes an annual out-of-pocket cap — once you reach the limit in covered drug spending, you pay $0 for covered medications for the remainder of the year. This cap provides important protection against catastrophic drug costs for patients with serious illnesses requiring expensive medications.

Despite this improvement, significant complexity remains:

• Formularies vary by plan. Each Part D plan maintains its own formulary. A medication that's well-covered on one plan may be on a higher cost-sharing tier — or not covered at all — on another.
• Tiers determine cost-sharing. Most plans place drugs into tiers: generics, preferred brand, non-preferred brand, specialty drugs. Prior authorization requirements, step therapy rules, and quantity limits add additional complexity.
• Annual plan changes require annual review. Part D plans can change formularies, tier structures, and cost-sharing amounts every year. Reviewing your Part D coverage annually during the open enrollment period (October 15 to December 7) is essential.
• IRMAA applies to Part D as well. Higher-income beneficiaries pay IRMAA surcharges on Part D in addition to Part B.

Part 5: Long-Term Care — The Gap That Can Derail Everything

Of all the gaps Medicare leaves behind, long-term care is the one most likely to cause serious financial damage to a retirement plan — because the costs are large, the duration is unpredictable, and most families don't plan for it until it arrives.

What Long-Term Care Actually Means

Long-term care refers to ongoing assistance with activities of daily living — bathing, dressing, eating, toileting, continence, and transferring. It also includes supervision for cognitive impairment such as Alzheimer's and dementia. This care can be provided at home, in an assisted living facility, in a memory care unit, or in a skilled nursing facility.

What Medicare Covers — and Doesn't

Medicare covers skilled nursing facility care only after a qualifying inpatient hospital stay of at least three days, and only for care that is skilled and medically necessary. Coinsurance for days 21 through 100 is $217 per day in 2026, and coverage stops entirely after day 100. Custodial care — help with daily activities that doesn't require clinical skill — is not covered by Medicare at any point.

The Statistics Are Sobering

• Approximately 70% of people who reach age 65 will need some form of long-term care during their lifetime
• The average length of care need is approximately 3 years; a meaningful percentage need care for 5 years or more
• The average cost of a private room in a skilled nursing facility nationally exceeds $100,000 per year
• Assisted living averages $50,000 to $70,000 per year
• In-home care at an average of 44 hours per week costs roughly $60,000 to $80,000 annually in most markets

How to Address the Long-Term Care Gap

• Traditional long-term care insurance provides a daily or monthly benefit for qualifying care. Premiums are relatively affordable when purchased in your 50s and increase with age and health conditions. The downside: premiums can increase after purchase, and if you never need care, you've paid premiums for coverage you didn't use.
• Hybrid life/long-term care policies combine a life insurance death benefit with a long-term care rider. If you never need care, your heirs receive the death benefit. If you do need care, the policy pays benefits. These eliminate the 'use it or lose it' concern and have fixed premiums, but typically require a larger upfront premium.
• Self-funding means setting aside a dedicated pool of assets specifically for long-term care costs. This works best for retirees with substantial assets. The risk: care needs at the higher end of the distribution can be financially devastating even for affluent families.
• A hybrid approach — some insurance coverage plus some self-funding — is often the most appropriate solution, balancing premium cost against the risk of a catastrophic care event.

‍Part 6: IRMAA Planning — How Income Decisions Affect Medicare Costs

IRMAA deserves its own section because it is one of the most impactful — and most preventable — sources of excess Medicare costs. Because IRMAA uses a two-year lookback, the income decisions you make in 2026 affect your Medicare premiums in 2028.

Sources of income that count toward MAGI for IRMAA include: wages and self-employment income, Social Security benefits, pension income, taxable IRA and 401(k) distributions, Roth conversions, capital gains, dividends and interest, and rental income. Tax-exempt municipal bond interest still counts toward IRMAA MAGI. Roth IRA withdrawals do not count — one of the most powerful long-term reasons to build Roth assets before retirement.

IRMAA planning strategies include:

• Roth conversions during low-income years. Converting Traditional IRA funds to Roth during years when your income is below the IRMAA threshold — for example, between retirement and age 73 when RMDs begin — can reduce future MAGI while building a tax-free asset.
• Managing RMD timing. RMDs begin at age 73 for most people under current law and can push income significantly. Proactive Roth conversions in earlier years reduce the RMD that must be taken later.
• Qualified Charitable Distributions (QCDs). QCDs allow you to direct up to $111,000 annually from your IRA directly to a qualified charity, satisfying your RMD without the distribution appearing in your taxable income — and therefore not affecting your IRMAA calculation.
• Life change appeals. If your income in the lookback year was unusually high due to a one-time event that won't recur, you can appeal your IRMAA determination and request that Medicare use a more recent year's income instead, using Form SSA-44.

Part 7: Strategies for Filling the Gaps

Once you understand what Medicare covers, what it doesn't, and what the real costs are, the goal becomes building a strategy that addresses the gaps without paying twice for the same thing.

• Match your coverage approach to your life. A healthy, active retiree who travels frequently may benefit from a Medigap plan's flexibility even if its premium is higher. A retiree with chronic conditions who sees the same specialists regularly may find a Medicare Advantage PPO a better fit.
• Budget healthcare as a fixed retirement expense. Build your retirement budget to include Medicare Part B and Part D premiums, your Medigap or Advantage premium, and a realistic annual estimate for dental, vision, and hearing. Add a buffer for deductibles and unexpected needs. Treating healthcare as an afterthought is one of the most common budgeting mistakes we see.
• Use your Health Savings Account (HSA) strategically. If you have an HSA from your working years, funds can be used tax-free for qualified medical expenses, including Medicare premiums (other than Medigap), dental, vision, and long-term care insurance premiums. Note that once you enroll in Medicare, you can no longer contribute to an HSA — but you can continue spending from it.
• Review your Medicare elections annually. Medicare Advantage plans change their networks, formularies, and cost-sharing every year. Part D plan formularies change annually. A 15-minute review during open enrollment (October 15 to December 7) can catch changes that would otherwise cost you money.
• Don't wait for long-term care to become urgent. Long-term care insurance and hybrid policies are significantly easier and less expensive to obtain in your 50s than in your late 60s. The best time to address long-term care is when you don't need it yet.

Frequently Asked Questions and Medicare Coverage

Does Medicare cover dental implants?

No. Medicare does not cover dental implants or most dental care. A small number of Medicare Advantage plans include limited dental benefits, but implants are typically excluded or subject to strict annual maximums that fall well short of actual costs.

What happens if I need care when traveling abroad?

Original Medicare generally does not cover care received outside the United States. Some Medigap plans (Plans C, D, F, G, M, and N) provide emergency foreign travel coverage — typically 80% of costs after a $250 deductible, up to a lifetime maximum of $50,000. If you travel frequently, verify your plan's international provisions and consider supplemental travel medical insurance for extended international trips.

Can I appeal an IRMAA surcharge?

Yes. If your income in the lookback year was unusually high due to a specific life-changing event — retirement, the death of a spouse, divorce, loss of pension income, or a one-time income event — you can file an appeal with the Social Security Administration using Form SSA-44. If approved, Medicare will use a more recent year's income to calculate your premium.

What's the difference between skilled nursing and custodial care?

Skilled nursing care is medically necessary care provided by licensed nursing or therapy professionals — wound care, IV medications, physical therapy. Medicare covers skilled nursing after a qualifying hospital stay, subject to cost-sharing. Custodial care is assistance with daily activities (bathing, dressing, eating) that doesn't require clinical skill. Medicare does not cover custodial care, regardless of where it's provided.

If my spouse needs long-term care, what happens to my finances?

Without a long-term care strategy in place, long-term care costs for a spouse can rapidly deplete shared assets, potentially leaving the healthy spouse in financial difficulty. Medicaid spousal impoverishment rules provide some protections, but they are complex and vary by state. For married couples with significant assets, long-term care planning is one of the most important financial protections you can put in place.

Should I enroll in Medicare even if I'm still working at 65?

It depends on your employer coverage. If you're covered by a large employer's group health plan (employer with 20 or more employees), Medicare is secondary. You can generally delay Part B enrollment without penalty. However, once employer coverage ends, you have a Special Enrollment Period to enroll in Part B without penalty. Get this right before you turn 65.

Putting It All Together: Medicare as Part of Your Retirement Plan

Healthcare is not a separate conversation from retirement planning — it is central to it. The decisions you make about Medicare structure, supplemental coverage, and long-term care directly affect how much your portfolio needs to generate each month, which accounts you draw from, how you time Roth conversions, and how much flexibility you have in retirement.

Done well, a coordinated healthcare and income strategy keeps your monthly costs predictable, protects your portfolio from large unexpected medical bills, and preserves flexibility to spend on what actually matters in retirement.

Done poorly — or not at all — healthcare becomes the variable that forces difficult trade-offs: cutting spending in other areas, drawing down the portfolio faster than planned, or facing a long-term care event without the resources to address it well.

At Arcadia Private Wealth, we treat Medicare planning as an integral part of every client's retirement income strategy. We help you understand your real healthcare costs, coordinate your Medicare elections with your tax plan, model the IRMAA impact of income decisions, and build a long-term care strategy that fits your situation.

If you'd like to work through your Medicare strategy as part of a broader retirement planning conversation, we'd welcome that discussion.

Disclosure: This article is for informational purposes only and does not constitute personalized financial, tax, or legal advice. Medicare rules, premiums, and cost-sharing amounts are subject to change annually. Figures referenced reflect 2026 Medicare data as published by the Centers for Medicare & Medicaid Services. Please consult a qualified financial advisor and Medicare specialist for guidance specific to your situation. Arcadia Private Wealth LLC is a Registered Investment Advisor.