Myth: Medicare Covers Everything

When you turn 65 and Medicare kicks in, are your health costs handled? Not even close. Medicare is solid coverage with large, deliberate gaps, and the most expensive gap is the one almost nobody plans for. People treat the card like an all-access pass. It’s more like a good base plan with a long list of exclusions.

What Medicare actually pays for

Medicare comes in parts, and the parts matter. Part A covers hospital stays. Part B covers doctors and outpatient care. Part D covers prescriptions. There’s real cost-sharing throughout, and the structure rewards people who understand how the parts fit together.

Even the routine costs aren’t zero. For 2026, the standard Part B premium is $202.90 a month, with a $283 annual deductible before Part B starts paying its share. That’s the baseline, and it’s manageable. The trouble is everything sitting outside the parts.

The hidden price: the thing Medicare was never built to cover

Here’s the gap that does the real damage. Medicare does not pay for long-term custodial care. Not the years in assisted living, not the home aide who helps with daily living, not the memory care unit. It covers short, skilled, rehabilitative stays, then it stops. The single largest health-related expense most affluent retirees will face is the one Medicare explicitly excludes.

That’s the trap in “Medicare covers everything.” It quietly tells people they’ve handled healthcare risk when the biggest piece is sitting completely uncovered. A couple can budget carefully for premiums and deductibles, feel protected, and still get blindsided by a $150,000-a-year care bill that Medicare won’t touch. The cost you didn’t plan for is the one that hurts, and this is the one. It’s worth deciding early whether you’ll self-fund that care or insure it, because Medicare has already decided it’s not paying.

The other holes are smaller but real. Routine dental, vision, and hearing are largely on you under original Medicare. Care outside the U.S. is mostly not covered, which matters if you plan to travel. And there’s no cap on what you’d owe out of pocket under original Medicare without supplemental coverage, which is the whole reason Medigap and Medicare Advantage plans exist.

The surprise built for high earners: IRMAA

Now the part that ambushes my clients specifically. Your Medicare premium is not the same for everyone. Earn above certain income thresholds and you pay a surcharge called IRMAA, the income-related monthly adjustment amount, on top of Parts B and D.

The surcharge climbs in tiers, and at the top it’s steep. For 2026, the highest-income retirees pay $487.00 in Part B surcharge on top of the $202.90 base, pushing a single person’s Part B premium to $689.90 a month. Per person. A high-income couple feels it twice.

Two things make IRMAA sneaky. First, it runs on a two-year lookback, so your 2026 surcharge is based on your 2024 income. A one-time spike, a big Roth conversion, a business sale, a large capital gain, can raise your Medicare cost two years later when you’ve forgotten the cause. Second, it’s a cliff, not a slope. One dollar over a threshold moves you to the next tier and the full surcharge applies. That’s why income timing in the years before and during Medicare is real money.

The honest version

Medicare is good coverage, and I’m glad it exists. It is not a wall around your health spending. It leaves long-term care almost entirely to you, charges high earners a surcharge that lags two years behind their income, and caps nothing on its own. Plan for the gaps, time your income around IRMAA, and decide in advance how you’ll fund the care Medicare won’t. The card is a strong start. Mistaking it for the finish line is the expensive part.