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Debunk 3 Medicare myths and prepare clients for potential costs
November 17, 2023
Even small misconceptions about Medicare can be costly. Learn to uncover common myths and consider how a guaranteed income solution can help clients prepare for Medicare-related costs in retirement.

Turn myths into reality for stronger retirement strategies

Myth #1: Medicare is free

Myth #2: Medicare costs are the same for everyone and they don’t change

Myth #3: Medicare covers long-term care

Offer a solution to cover Medicare costs and gaps

Build confidence through key retirement decisions

Turn myths into reality for stronger retirement strategies

Medicare is one of the most important factors in a retirement strategy, but it’s also one of the most misunderstood. It’s estimated that less than 15% of people have someone they can trust to help them prepare for health care expenses.¹ This lack of support can lead to misconceptions about what Medicare really costs and what it does (and doesn’t) cover.

You’re in an important position to help your clients build understanding and confidence for this critical part of their retirement strategy — and strengthen your relationships as a result. Learn three common Medicare myths that can lead to unexpected costs and be prepared with the facts. Then, consider how a guaranteed income solution can help cover Medicare-related costs and ultimately keep a client’s retirement strategy on track.

Myth #1: Medicare is free

An estimated 79% of people believe Medicare Part B is free.² While Part A is free for most people, there are several other parts that require premiums, deductibles and out-of-pocket costs.

Some of the costs associated with Medicare include:³

  • Part A (hospital insurance): $1,600 hospital deductible per stay, which could be paid multiple times a year.
  • Part B (medical insurance): Standard annual premium is $1,980 for 2023.
  • Part D (drug coverage): Could require monthly premiums.

Even after paying premiums and deductibles, Medicare still doesn’t cover all health care costs.³ In fact:

  • Part B: Requires 20% of coinsurance on health care services, after the deductible is paid.
  • Part D: Covers only a portion of medication costs.

As a result, a typical retiree spends about $5,140 annually on Medicare and health care expenses.⁴ Ensuring clients have retirement income set aside for these expenses is key.


Myth #2: Medicare costs are the same for everyone and they don’t change

While some parts of Medicare have set costs, plans are highly personal. Total expenses will vary from person to person. For example, if your client is considered a higher-income earner, they can expect to pay more for Parts B and D.⁴

Like other cost-of-living expenses, Medicare expenses continue to rise. For instance:

  • Medicare Part B premiums are expected to increase in 2024.⁵
  • Each year, Part D prescription drug plans and Medicare Advantage plans can change premiums, deductibles and covered medications.

Across the board, health care costs are expected to rise significantly over the next 10 years. It’s likely that clients entering retirement today will see their Medicare costs increase over time.

Icons representing Medicare-related premiums, deductibles and medication expenses.


Myth #3: Medicare covers long-term care

Up to 56% of middle-income baby boomers believe Medicare will pay for ongoing long-term care needs in the future.⁶ The truth is, Medicare doesn’t pay for any long-term care services.

The need for long-term care and the associated costs are impossible to predict, but if these services are needed, they can quickly deplete a client’s retirement savings. A nursing home stay alone costs an average of nearly $95,000 annually.⁶

When 70% of people 65 and older will need long-term care services in their lifetime,⁶ it’s critical to consider this potential need in a client’s retirement strategy.

Offer a solution to cover Medicare costs and gaps

You can help give clients assurance that they can cover Medicare costs — and health care expenses when Medicare falls short — while supporting their retirement income strategy. It’s possible by creating a source of guaranteed income they can’t outlive.

Using an annuity with a lifetime income benefit, a client can count on a guaranteed income stream to help cover Medicare and health care expenses even if the annuity contract value falls to zero. This source of guaranteed income protects against risks, like rising expenses or an unexpected health event, to increase the likelihood their money will last through retirement.

And to support a long-term care strategy, some annuities even offer built-in features that allow clients to increase annual benefit withdrawals if they become confined to a nursing home. And if income from the annuity isn’t always needed, some annuities allow clients to roll over and reserve a certain number of their benefit withdrawals to cover expected or unexpected expenses — like health care costs.

Build confidence through key retirement decisions

We’re here to help you give your clients understanding and confidence that leads to stronger relationships and ultimately more holistic retirement strategies for your clients. Understanding costs is just one part of helping clients approach Medicare decisions. We have several resources to support you and your clients with the Medicare planning process.

As you guide clients through their key retirement decisions, explore additional topics that can influence their strategies:

Get your guide to Medicare for financial professionals.

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Annuities are intended as vehicles for long-term retirement planning, which is why withdrawals reduce an annuity’s remaining death benefit, contract value, cash surrender value and future earnings. Annuities also may be subject to income tax and, if taken prior to age 59 ½, an additional 10% IRS tax penalty may apply.

1 "Nationwide Health Care Consumer Survey," conducted by The Harris Poll on behalf of the Nationwide Retirement Institute (July 2020)

2 2019 Health Care Consumer Survey: Summary of key findings, Nationwide Retirement Institute®

3, accessed October 2023

4 Total cost for a Medicare beneficiary in 2022 if insured under Original Medicare with a Plan G Medigap Policy on a national average. “2022 Health care Costs in Retirement,”


6 "Retirement Care Realities For Middle-Income Boomers 2020,"