Executive Summary: Medicare as Primary Coverage: What It Covers, What It Does Not, and Where the Gaps Create Product Opportunity
LFP-16.02 — The Post-Medicare Market#
Medicare provides the 65-plus population with coverage that rivals or exceeds most private insurance for acute medical care. Part A covers inpatient hospital care with a $1,676 per benefit period deductible in 2025 and coinsurance reaching $419 per day for extended stays. Part B covers physician services at 80 percent after a $257 deductible, with standard premiums of $185 monthly in 2025 rising to $202.90 in 2026, and IRMAA surcharges affecting roughly 8 percent of enrollees with income above $106,000 for individuals. The Inflation Reduction Act restructured Part D beginning in 2025, eliminating the coverage gap and establishing a $2,000 annual out-of-pocket cap (indexed to $2,100 in 2026), reducing beneficiary exposure by roughly 75 percent for those with high drug costs compared to the prior $8,000 threshold.
The gaps are specific and largely unchanged since 1965. Routine dental receives zero coverage, with implants costing $3,000 to $5,000 each and full restorations exceeding $20,000. Even Medicare Advantage enrollees with dental benefits pay 76 percent of dental spending out of pocket according to Health Affairs data. Routine vision beyond medical eye exams is excluded. Hearing aids averaging $2,000 to $6,000 per pair are not covered, despite research suggesting three-quarters of adults over 70 could benefit from them. International care receives virtually no coverage, with exceptions so narrow they are practically irrelevant for the mobile entrepreneur.
Traditional Medicare without supplemental coverage creates theoretically unlimited cost-sharing exposure through uncapped 20 percent coinsurance on Part B services and resetting Part A deductibles. Medigap policies address this through standardized plans, with Plan G providing near-zero cost-sharing for covered services. Medicare Advantage offers an alternative with required out-of-pocket maximums and potential dental, vision, and hearing benefits, but network restrictions may be unacceptable for entrepreneurs with multiple residences or extensive travel. Approximately 52 percent of beneficiaries were enrolled in Medicare Advantage as of 2024.
Each gap maps to a product component: group dental and vision through employer or association mechanisms, hearing benefits, international care coordination, and cost-sharing wraps through Medigap or group Medicare Supplement. The product opportunity is not to fix Medicare but to wrap around it, combining coverage completion with the tax optimization and administrative simplification that the entrepreneur’s business structure makes possible.