Retirement healthcare expenses eat up a significant portion of your nest egg, even if you’re healthy. A 65-year-old couple retiring in 2024 can expect to spend $165,000 on out-of-pocket medical expenses, according to Fidelity, and this doesn’t include things like dental care, over-the-counter medications, or long-term care.

Prioritizing your health at every age is critical to keeping these expenses as low as possible. How you use the resources at your disposal also matters. This involves learning exactly what your health insurance plans, including Medicare, cover and what you’ll be responsible for on your own.

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Medicare looks different every year. Some of the 2025 changes coming, like a $2,000 out-of-pocket cap on prescription drug spending, are helpful. But there’s another little-known change coming that could take a major toll on retirees’ budgets next year.

How you get care influences your cost

In-person visits are the type of medical care people are most familiar with, but they’re no longer your only option. The proliferation of telehealth services has enabled us to get medical care from a licensed physician from anywhere with an internet connection. A majority of seniors who have used telehealth services are happy with the care they received, according to an American Medical Association (AMA) survey, especially during bad weather or when they weren’t feeling well, with restricted mobility.

Telehealth also has significant cost savings. A single visit for an acute issue averages about $40 to $50, according to telehealth provider Health Recovery Solutions, while a physician office visit for the same issue could cost $83 on Medicare. And this is only part of the savings.

Those who opt for telehealth services save themselves travel time and costs, including gas or public transportation. It’s difficult to measure the exact savings, as this largely depends on where you live, where you must travel to, and how often you have to seek care. Even if it only saves you a few dollars on gas, that’s still money you can hold for other retirement expenses.

In 2024, Medicare provides telehealth services from any location throughout the U.S. But fewer people will have that luxury next year.

What Medicare’s telehealth coverage will look like in 2025

Medicare isn’t doing away with its telehealth coverage entirely next year, but it is substantially limiting its availability. Beginning Jan. 1, you must be in an office or medical facility in a rural area in order to access most telehealth services.

Unhelpfully, Medicare doesn’t give a clear definition of what “rural” means. The federal government uses two key definitions of what constitutes an urban area:

• U.S. Census Bureau definition: Urbanized areas of 50,000 people or more, OR urban clusters of at least 2,500 and less than 50,000 people
• Office of Management and Budget definition: Metro areas of 50,000 people or more, OR micro areas of at least 10,000 and less than 50,000 people

It’s probably safe to say that if your town fits neither of these criteria, it’s considered rural. But if you have any questions about this, you can always contact Medicare by phone or mail to determine whether you’ll be affected by this rule change.

Certain telehealth services will continue to be available to those on Medicare who do not live in a rural area, including:

• Monthly End-Stage Renal Disease (ESRD) visits for home dialysis
• Services for diagnosis, evaluation, or treatment of symptoms of an acute stroke wherever you are
• Services to treat a substance use disorder or a co-occurring mental disorder, or for the diagnosis, evaluation, or treatment of a mental health disorder, including in your home
• Behavioral health services, including in your home
• Diabetes self-management training
• Medical nutrition therapy

In all cases, you’ll still have to pay your Medicare Part B deductible, as well as 20% of the Medicare-approved amount.

Medicare Advantage plans and telehealth services

Those who have Medicare Advantage plans in 2025 may retain access to additional telehealth services. It depends on your plan. If this is important to you, make sure to choose a provider that covers telehealth visits during the open enrollment period this year. That runs from Oct. 15 to Dec. 7, 2024, if you want coverage to begin on Jan. 1, 2025.

Those on Original Medicare who want help paying for telehealth services could also look for a Medicare supplement, or Medigap, policy that covers telehealth. Review the plan’s services carefully before signing up, and contact the plan provider with any questions.

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