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Paying for "Deluxe" Medical Expenses Medicare Doesn’t Cover

Retirement Daily on The Street logo Retirement Daily on The Street 8/10/2022 Retirement Daily Guest Contributor

For those who need deluxe medical services for their individual needs, the costs won't be covered by Medicare.

By James Paiva

By and large, Americans love Medicare. According to a 2018 Medicare Current Beneficiary Survey, 94% of Medicare recipients said they were “satisfied” or “very satisfied” by the quality of their medical care.

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But there’s a growing area where Medicare is lagging – medical products or services that the Centers for Medicare and Medicaid Services (CMS) categorizes as “deluxe” offerings. What are these deluxe items? Think of premium intraocular lens implants for patients being treated for cataracts; the most advanced hearing aids for those coping with hearing loss; or fully personalized knee replacement systems that have been shown to be clinically superior to off-the-shelf implants. (Full disclosure: my company, Conformis, makes fully personalized knee and hip implants.)

Increasingly, Medicare won’t pay the extra amount needed for these state-of-the-art products or services. And that means more out-of-pocket expenses for Medicare recipients who choose the best that modern medicine has to offer. Consider:

  • The average Medicare or Medicare Advantage recipient in 2018 paid $914 out-of-pocket for hearing care, which may include hearing exams, fitting hearing aids, and the actual hearing aids themselves.
  • Although private hospital rooms are increasingly popular, and most new hospital construction in the U.S. includes a larger percentage of private rooms, Medicare doesn’t pay the increased costs of a single-occupancy hospital room.
  • Expenses for some custom orthotics and other devices aren’t covered by Medicare. Even those that are covered require significant deductibles and co-pays.

Think of the “deluxe” services that you’ve encountered in the dentist’s office. No matter how good your dental insurance, you’ll still pay significant out-of-pocket fees for needed care like crowns, braces, white fillings, and root canals. And every year, there are more medical devices and services that Medicare puts into the deluxe category that many seniors will likely feel are very beneficial.

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Take the category that I’m most familiar with – fully personalized hip and knee replacements designed and built individually to fit your unique anatomy. Upgrading from an off-the-shelf generic knee – a standard size that necessarily comes with fit compromises – to a fully personalized knee will cost most Medicare recipients at least $3,000 in out-of-pocket fees. The actual amount depends on the facility’s administrative costs and whether the procedure is done in a hospital or an ambulatory surgical center.

Yet patients have reported that they are happier with fully personalized knees. A recent peer-reviewed study found that among patients who had a fully personalized knee on one side, and an off-the-shelf knee on the other, 75 percent preferred the fully personalized knee. The unique, fully personalized knee was associated with greater mobility, less pain, and a more natural feel.

For this type of procedure – and all deluxe options that require co-pays by Medicare beneficiaries – the key is planning. While an out-of-pocket payment of $3,000 or more is not trivial, it helps to think of it as an investment in your long-term health that will yield dividends over time. More seniors continue to be active into their 80s and 90s, and a knee replacement that helps seniors regain mobility and activity is a key contributor to health and quality of life. Many doctors say that immobility, due to pain or injury, is an important contributor to long-term decline among many patients.

If you think of a fully personalized knee that way, the cost is actually quite low. A 65-year-old man in the U.S. has an average life expectancy of just over 18 years. So, a one-time investment of $3,500, for example, translates to only about $194 a year, or $16.20 a month – an excellent price for something that can help keep you active and pain-free for years to come. The monthly out-of-pocket costs for other deluxe services, such as premium lens implants and upgraded quality hearing aids, are equally compelling.

There are numerous ways to plan for and pay the lump sum that Medicare doesn’t cover. Here are just a few:

  • Health savings accounts are tax-advantaged savings accounts that can be used to pay for qualified medical expenses, including most Medicare deluxe items. Because seniors can use pre-tax dollars for their HSAs – and they accrue interest tax-free – they can help lower the actual cost for out-of-pocket expenses.
  • Flexible spending accounts are another tax-advantaged savings mechanism that is available to those who still get their health insurance through their employers.
  • Medical credit cards are another option. These specialized credit cards allow you to pay for qualified out-of-pocket medical expenses over time. Some have low-or no-interest options if the expenses are paid off within a specified period, such as 6, 12, 18, or 24 months. Be sure to speak to a trusted financial advisor before opening any credit card accounts to pay for medical expenses.

In the U.S., we’re seeing an explosion of new medical technology and advanced services. Some treatments and devices were unimaginable just a few years ago but are showing great promise today. Unfortunately, the newest technology and treatments often cost more. Add to this the fact that seniors are living longer and leading more active lives, and you can understand why Medicare’s limits require out-of-pocket payments for some of the most advanced and innovative treatments and services that today’s seniors demand.

For many of these deluxe products and services, however, the benefits are clear and backed up by solid clinical evidence documented in peer-reviewed studies. Speak to your doctor before making any medical decisions. Standard, fully covered treatments may work just fine in many cases, but many of the deluxe products and services may be superior to the basic alternatives and may help improve your quality of life. Make your decisions based on sound financial and medical advice, and live life to the fullest.

About the Author: James Paiva 

James Paiva is vice president of marketing for Conformis, a leading manufacturer of personalized knee and hip joint replacements and other advanced orthopedic devices.

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