California Medigap Insurance: Filling in the Gaps in Medicare

Medicare Parts A (hospital), B (doctors) will cover a lot of your medical expenses when you get sick or injured. However, there are some pretty big holes in this coverage which, if not plugged, could cost you a lot of money. You’ll need to purchase a “supplemental” or “Medigap” insurance policy to fill these holes, or gaps in coverage.

Gaps in Coverage

Medicare Part A pays most expenses while you’re in the hospital. However, in 2014 you must pay a $1,216 deductible for your hospital stay. After the deductible, Medicare generally pays all of your in-hospital expenses for 60 days. That’s a long time to be in the hospital, but some people stay longer. You’ll have to pay $304 per day for days 61 -90 in 2014 (30 days x $304 = $9,120.) After the 90th day you’ll have to pay $608 per day for hospitals stays. Imagine if you’re in the hospital for another 90 days (90 x $608 = $54,720). You’d pay the $1,216 deductible; plus $9,120 in co-insurance for days 61 – 90; plus $54,720 for the next 90 days. Hopefully this will never happen but if you were in the hospital for half of a year (180 days) with no supplement policy, you’d have to pay $65,056 in 2014. That’s a huge hole or gap in coverage.

Medicare Part B has a $147 deductible in 2014 for out-of-hospital medical services, i.e., for doctor consultations, diagnostic tests, outpatient medical and surgical services and durable medical equipment such as wheel chairs. After the deductible, Medicare generally pays 80 percent for these services and the patient pays the remaining 20%. There is no “stop-loss” or “out of pocket maximum” on Medicare. So, if you get really sick or injured and you incur $1 million of approved medical expenses, Medicare would pay $800,000 and you’d have to pay $200,000. Also, keep in mind that the deductible and co-insurance payments only apply to a specific calendar year. Starting January 1 of the following year you would have to pay another deductible and the co-insurance would start again.

Medicare does not pay for deductibles, co-insurance and copayments, dental care, cosmetic surgery, custodial care, acupuncture, hearing aids, hearing exams and screenings, routine eye care and most glasses, non-skilled care in a nursing home, most health care while traveling outside of the United States, most outpatient prescription drugs.

Most people can not afford to pay such astronomical sums. They prefer to pay a small premium each month and purchase a Medicare supplemental insurance plan or “Medi-Gap” policy to fill these holes.

Supplemental Plans to Fill the Gaps in Coverage

The Centers for Medicare and Medicaid Services (CMS) runs Medicare. Thankfully, CMS has standardized the plans that fill in the holes in Medicare. Health insurance companies can only offer you one of the standardized plans. That makes it easy to compare plans. On June 1, 2010, CMS revised the Medigap policies, eliminating some and adding a few new plans. Currently you can purchase Medicare Supplemental plans A, B, C, D, F, F with a high deductible, G, K, L, M and N. CMS has written a lengthy guide to help Choosing a Medigap Policy.

You don’t need to become an expert in all of the benefits of all of the plans. Most California health insurance companies offer only a few of the eleven supplemental policies. For example, in 2012, Anthem Blue Cross of California, offers just five Medicare Supplemental policies A, F, High Deductible Plan F, G and N. Of these, Plan F is the most comprehensive, meaning that it fills more of the holes in Medicare than any other Medigap plan.

Medicare Supplemental Plan F pays for the following:

  • Part A deductible
  • Per day hospital charges for a semiprivate room and board, general nursing and miscellaneous services and supplies for days 61 – 90 and day 91 and after up to 365 days of hospitalization
  • Skilled Nursing Care for 100 days when approved by Medicare and following a hospital stay of 3 days
  • Blood – the first 3 pints and additional amounts
  • Part B Deductible
  • 20% coinsurance for approved Part B charges
  • Part B charges in excess of Medicare’s approved amounts
  • Blood – 3 pints plus remainder of Medicare approved abouts
  • Durable Medical Equipment 20% coinsurance
  • Foreign Travel -80% of medically necessary emergency care during the first 60 days outside of the U.S. to a lifetime maximum of $50,000 (Medicare pays zero)

The Medicare Supplemental plan F is the most comprehensive plan currently available. You also may want to consider the “High Deductible Plan F” as a cost effective alternative.

Medicare Supplemental Plan F HIGH DEDUCTIBLE pays for the following:

  • Same benefits as Plan F after one has paid a calendar year $2000 deductible. On this plan you pay the Part A and B deductible and other medical expenses. Your payments apply to the $2000 deductible. Once you’ve paid $2000 in qualified medical expenses, the plan pays for medical services.

The monthly premium for the High Deductible Plan F is less than half the premium of Plan F. It is a good option, but you’ll have to do some math to determine if it is a wise choice. With the High Deductible Plan F you expose yourself to $2000 more financial liability. If you save over $2000/year in premium, it makes sense in our opinion. If you save less than $2000 it may not be a good option. Of course if you’re in great shape and take care of your health, you may still want to consider the High Deductible Plan F and pay a lower monthly premium. can assist you with selecting and enrolling in a California Medigap and Medicare Supplemental plan.