When we think about government programs supporting those in retirement, many people think mainly of Social Security and forget Medicare, which is just as vital. There were recently more than 67 million Americans enrolled in Medicare — nearly the number that receive Social Security benefits.

Here’s why Medicare matters so much. According to Fidelity, a 65-year-old person retiring in 2024 could expect to spend $165,000, on average, on medical and healthcare expenses throughout their retirement. That doesn’t even include long-term care, over-the-counter medications, and most dental services. A married couple should assume an average cost of $330,000.

Without Medicare, these figures would be much higher and potentially financially devastating for millions.

Medicare basics

Medicare is a pretty wonderful program, but it could be even better. Before jumping into how, here’s a quick refresher on Medicare basics.

You can (and typically should) enroll in Medicare as you approach age 65. When you do so, you get to choose either “original” Medicare, which features Part A (hospital coverage) and Part B (physician/medical insurance), or a Medicare Advantage plan, sometimes referred to as Part C. Those who sign up for original Medicare typically add Part D prescription drug coverage, and sometimes a “Medigap” supplemental coverage plan, too.

So you’re probably going to opt for original Medicare’s Parts A, B, D, and a Medigap plan, or you’ll instead sign up for a Medicare Advantage plan. There are pros and cons to both choices.

For example:

• Original Medicare gives you access to almost every doctor in the U.S., and you’ll often pay only 20% of various costs, with Medicare paying the other 80%. That certainly sounds terrific, but paying just 20% can still be disastrous if you end up with, say, massive hospital costs. (Medigap plans can cover these costs for you, though, for a price.)
• A Medicare Advantage plan, meanwhile, caps your out-of-pocket costs and typically offers dental, vision, and hearing coverage, too. But to enjoy these low costs, you’ll be restricted to using providers and facilities within your plan’s network. And some Medicare Advantage plans have been criticized for denying certain care for members.

No matter which kind of Medicare you choose, be sure to enroll on time, or you can face an extremely stiff penalty.

Making Medicare better

As good as Medicare is, it can still be better. The folks at the Center for Medicare Advocacy have a long list of suggested reforms, such as:

• Capping out-of-pocket costs in original Medicare. Right now, original Medicare has no out-of-pocket cap, leaving some members paying a lot. Per KFF.org, “In 2016, the average person with Medicare coverage spent $5,460 out of their own pocket for healthcare.” Presumably, people are spending even more now.
• Mandating that Medigap plans no longer exclude some people due to factors such as pre-existing conditions or age. Right now, if you don’t initially sign up for a Medigap plan, you may not be able to get one later.
• Standardizing original Medicare and Medicare Advantage plans, so that they have the same benefits — and adding coverage for dental, vision, and hearing care to original Medicare.
• Adding coverage for long-term care.

Those are just some of many suggested improvements. It’s true that these can increase costs for Medicare, but one way to offset that is suggested by another recommendation: “… ensure [that] savings achieved through drug negotiations, or by other means, are reinvested into the Medicare program.”

Another advocate for improvements in Medicare plans is Dr. Sachin Jain, a thought leader in the medical field and current President and CEO of SCAN Group & Health Plan. Here are some of his suggestions:

• To simplify matters, benefits of Medicare Advantage plans should be standardized — the way that Medigap plans now are.
• Medicare Advantage plans are rated by a “STAR” system, and Jain advocates changing the criteria so that plans earn stars based more on outcomes than on processes. (For example, a plan might get points when a patient is taking their medications, not just when they buy them.)

There’s a lot more you might want to learn about Medicare — especially before you need it — so that you can make the right decisions for your future health. Keeping up with changes and suggested changes to the program is one way to do so.

Healthcare costs should be a major consideration in your retirement planning — and you may be able to shrink your healthcare spending by making some savvy Medicare moves.

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