Understanding Medicare and Financial Hardships

Having a handle on your finances is crucial when you’ve reached retirement age or you’re starting to plan for your later years in life. You’ve worked hard, and want to be able to live comfortably – that’s understandable, and you should!

But, in addition to planning out your everyday budget items, one thing you should be looking into is medical insurance. It’s no secret that aging comes with an increased risk for certain illnesses and accidents.

If you want to keep your nest egg secure, preparing yourself for unexpected medical expenses is important.

Without that preparation, financial hardships like medical bills can ruin the retirement savings you’ve built up almost immediately. For many seniors, Medicare can help to avoid traditional high insurance costs and protect you when you need medical attention.

If you’ve never considered Medicare or haven’t done your research, let’s dive a little deeper into what it is and how you can prepare yourself for unexpected medical expenses.

What is Medicare?

Most people have heard of Medicare. But, until you reach a certain age, it might not mean much to you. So, you may not have done your research on what it provides or how it can help you with your medical expenses.

There are dozens of questions you should be asking about Medicare, including:

  • What are your out-of-pocket maximums?
  • Why are some plans free?
  • Is a Medicare savings account right for you?
  • What is the cost?

We’ll cover a few of those answers to give you a springboard, but doing your own research to find a plan that works for you will always be your best option.

At its core, Medicare is a national health insurance program. It’s federally funded and is intended to provide basic health insurance to individuals who are 65 or older.

With the baby boomer generation getting older, it’s no surprise that Medicare has become the most popular health care insurance program in the U.S. for senior individuals.

Medicare comes in “parts,” which can be a bit confusing at first. But, Part A and Part B should be your main focus, as they cover most of the essential medical services, including hospital and general medical care.

Medicare Part D is used to cover the cost of prescription drugs.

Keep in mind that Medicare isn’t always free. It can be adjusted based on your income. But, you’ll still have to choose a Medicare plan that fits your needs and your budget.

Look at your overall healthcare costs from years prior to determine which plan is right for you. It’s also a good idea to make sure your current physician and any hospitals you might go to accept Medicare as a payment option.

Do You Still Need Supplemental Insurance?

You’ll notice we didn’t cover the importance of Medicare Part C yet. That’s because it’s a provision within the program. It allows private insurance companies to provide you with additional/supplementary insurance even when you’re already on Medicare. If you’re on Medicare Part A and B, certain things aren’t covered, including:

  • Long-term care
  • Most dental procedures, including dentures
  • Hearing aids
  • Cosmetic procedures
  • Eye exams
  • Foot care

Because these services aren’t covered, many older individuals opt for a supplementary insurance plan. You never know when an unforeseen financial circumstance could completely derail your finances.

When it comes to your health, that might include things like extreme vision problems or a dental emergency.

Without insurance to cover your care, you could end up paying thousands of dollars out-of-pocket.

Taking a proactive approach by having supplementary insurance will allow you to avoid those major expenses if/when they occur. You might be paying a bit more each month, but it’s much less than you would be spending for immediate medical care, surgery, or emergency service.

Preparing for Financial Hardships

You’ve worked hard for years to save money. But, if you’ve only been focused on saving enough income for your normal expenses, you could immediately experience financial hardship if you find yourself in a medical emergency without the right insurance.

Even if you decide to go with Medicare, preparing for these hardships will offer you peace of mind as you age. It starts with something as simple as building a budget. When you’re putting something together, consider the following:

  • What is your net income from social security, side jobs, etc.?
  • What are your normal expenses?
  • What are your goals?
  • Where are your saving sources?
  • Who can offer you support?

Many retirees want to take advantage of their free time and do some traveling. Others may want to move into a different home (and downsizing is a great way to save money!).

But, if you’re only thinking about the things you want and not the “what ifs,” you’re missing out on something extremely important.

No one wants to imagine themselves in any kind of medical emergency or in need of long-term care. Unfortunately, it can happen. The more prepared you are now, the less worried you’ll be in the future if you ever find yourself in that situation.

If you’re considering Medicare, be sure to do more research to determine the right plan for you. If you’re over the age of 65, it could be exactly what you need to receive basic healthcare coverage, so you can save money for other unexpected expenses.


Dan Matthews is a freelance writer with a penchant for financial wisdom and solid research. You can find him on Twitter @danielmatthews0 and LinkedIn.


Josh founded Money Buffalo in 2015 to help people get out of debt and make smart financial decisions. He is currently a full-time personal finance writer with work featured in Forbes Advisor, Fox Business, and Credible.