Six Medicare Gaps and How to Fill Them
Let’s talk about a very important Medicare concept: Medicare gaps. Medicare Part A and Part B - known collectively as “Original Medicare” - provides comprehensive coverage, but it has some significant “gaps” that can leave beneficiaries open to unexpected out of pocket costs. It’s important to understand what these gaps are and learn how you can reduce your liability by picking up another type of coverage along with Original Medicare, like a Medicare Supplement (Medigap) or Medicare Advantage Plan.
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The Six Medicare “Gaps”
So what are the Medicare “gaps”? There are six that I always point out to beneficiaries and I like to divide them up into Part A Gaps (inpatient/hospital) and Part B Gaps (medical). Let’s start with the gaps on the Part A side.
Medicare Part A Gaps:
Inpatient Hospital Deductible - In 2024, the inpatient hospital deductible is $1632. If you go into the hospital, you are immediately spending $1632 before your insurance kicks in. It should be noted that this deductible is per benefit period. A benefit period lasts for 60 days. If you are admitted to the hospital then discharged and readmitted within 60 days, you do not pay the deductible again. However, if you are discharged and return to the hospital 61+ days later, you are in a new benefit period and the deductible applies again, so you could end up paying a $1632 deductible multiple times throughout the year. That’s a big gap!
Inpatient Hospital Coinsurance - After your inpatient hospital deductible is met, you are subject to a coinsurance. For days 1-60, there is a $0 coinsurance. For days 61-90, the coinsurance is $408/day. Beyond that, you are digging into “Lifetime Reserve Days”. You have 60 of these days for a lifetime, and for each one you use, you are spending $816/day!
Skilled Nursing Facility Stay - Let’s say you needed to spend some time at a rehab facility for skilled care. Similar to the inpatient hospital coinsurance, you are also subject to a coinsurance if you are admitted to a Skilled Nursing Facility. For days 1-20, there is a $0 copay. For days 21-100, there is a $204/day coinsurance.
Medicare Part B Gaps:
Part B Deductible - In 2024, there is a $240 deductible that must be met prior to your medical (Part B) coverage kicking in. This deductible changes yearly.
Part B Coinsurance - After the deductible is met, you will pay a 20% coinsurance for medical services. Let’s say you have an outpatient procedure. You would be liable for 20% of that procedure. If you have lab work, imaging, or another medical service, you would be liable for 20% of those costs. As you can imagine, these costs can really add up!
Excess Charges - this is an interesting one. Excess charges are additional fees that a doctor may charge for services that Medicare doesn't agree to pay for and they can be up to 15% of the Medicare-approved amount. However, state law in Pennsylvania prohibits doctors from charging you excess charges, so within PA, this gap is not a huge concern. However, if you receive care outside of the state, this could be a potential issue.
Medicare Gaps and How They Can Affect Beneficiaries
Let’s take a look at how these gaps can impact Medicare beneficiaries. Meet Mr. Jones. Mr. Jones opted to only take Medicare Part A and Medicare Part B (“Original Medicare”). He has no other coverage that can help reduce his liability.
Mr. Jones is hospitalized. He is admitted for a 5 day stay and is released with no complications or further treatment. Three months later, he is then readmitted to the hospital for a separate issue. He has a 3 day stay followed by 30 days in a Skilled Nursing Facility. He is discharged, receives some other outpatient services and meets his Part B deductible, then he sees a specialist.
Unfortunately, Mr. Jones is now out $5,604! As you can see from this example, these costs can really add up.
Truman’s Tip:
Don’t be like Mr. Jones! Protect yourself by getting a Medicare Supplement or a Medicare Advantage Plan. Consult with a Medicare Broker who can assist you in determining what plan best fits your needs.
Covering the Gaps
Because of these significant Medicare gaps, I never recommend only taking Medicare Part A and Part B. It is always my recommendation to reduce your liability by covering or mitigating these gaps the best that you can. You can do this by opting into either a Medicare Supplement (Medigap) or a Medicare Advantage Plan:
Option 1: Medicare Supplement (Medigap) Plan - A Medicare Supplement Plan, also known as Medigap, is a health insurance policy that helps pay for some of the out-of-pocket costs that Original Medicare does not cover. In other words, it helps cover the gaps left by Original Medicare. Medigap plans are generally standardized and are named by using letters - A, B, C, D, F, G, K, L, M and N. Each letter signifies a different level of coverage, but benefits from insurer to insurer are usually identical for the same lettered policy.
The most comprehensive Medigap plan that you can currently get is a Plan G. A Plan G covers 5 out of 6 gaps! The only gap that it does not cover is the $240 Part B deductible. If Mr. Jones had had a Medigap Plan G, he would have paid the $240 deductible then all of his other expenses would have been covered. He would only be out $240 as opposed to $5,604!
Option 2: Medicare Advantage Plan - Medicare Advantage (also known as “Part C”) is a type of Medicare health plan offered by a private company that contracts with Medicare. Whereas Medigap Plans “supplement” Original Medicare and completely “cover” some of the gaps, Medicare Advantage Plans tend to “lessen” the gaps.
Medicare Advantage Plans are network based (meaning you may have to see certain doctors within the plan’s network) and they are structured by having copayments and coinsurances. For example, you may pay a copay when you go see a specialist or you may pay a coinsurance when you need a piece of durable medical equipment.
Let’s say Mr. Jones had a Medicare Advantage Plan. On his particular plan, he had a $275 per stay inpatient hospital benefit, $175 per day Skilled Nursing Facility coinsurance for days 21-30, and a $25 copayment for a specialist. Having this coverage significantly reduces his cost; instead of having $5,604 in bills, he only has $2,325.
Summary
Understanding the gaps in coverage that Original Medicare leaves is crucial for Medicare beneficiaries. These gaps can result in substantial out-of-pocket expenses. An independent Medicare agent can help you look at your options and determine what makes sense for your individual situation. If you will be Medicare-eligible soon or you are already on Medicare and need assistance, contact Care Compass today!
