Standard Medicare only covers 80% of medical bills (after a deductible). Many decades ago, my grandmother told me about Medigap insurance to cover the 20% which is not covered by Medicare.
Somehow, the knowledge isn’t universal even though Medicare.gov has links to Medigap insurance providers.
Last week, my Tax Aide local manager visited me to drop off the annual test booklet. He just turned 65 and is starting Medicare. While he registered for traditional Medicare (good decision) he decided to NOT get Medigap insurance since he feels that he has enough money to cover the 20% that Medicare doesn’t cover. He will need the Medicare since his father died young of a heart condition and he plans to get an angiogram.
Well, I tried to straighten him out.
I just received the EOB (Explanation of Benefits) from my Medigap insurance provider. The top-line bill for my angiogram (and associated tests) was $14,300. My out of pocket was zero. The uncovered 20% would have been $2,860. My Medigap Part G (gold standard) coverage cost $164.90 per month in 2024 or $1,980 per year.
I did my best to convince this intelligent man to get Medigap Part G. The cost of health care is astronomical. I don’t have the EOBs from my surgery and hospital stay yet but I’d be surprised if it’s less than $1 million.
Wendy (will keep you posted)
Your grandmother steered you wrong. You only pay 20% on Part B expenses. Your piece of a $1 MM hospital bill is capped at the $1,676 Medicare Part A deductible for 2025. That’s a small fraction of 1%, not 20%.
Also important to note that you’re paying 20% of the Medicare reimbursement for Part B, not the unlimited price gouging charges you had from private insurance pre age 65.
Every piece of Medicare insurance marketing available is filled with lies. You have to study the base documents at CMS to get the true story.
I went through the calculations back in 2020 when I was evaluating my Medicare options.
I signed up for the United American $44/month high deductible Plan G back in 2021 when I turned age 65. Not because I was worried about the “20% that Medicare doesn’t pay”, but because I figured that if my costs were capped at $2500 out-of-pocket, no matter what, I wouldn’t second guess going to the emergency room if I had symptoms of a heart attack or stroke. But that’s just me.
It’s also important to note that all Medigap plans are the same. You’re not going to get “better service” by paying a higher premium. CMS (i,e., Medicare) does all the benefit administration and accounting. The Medigap insurer, just collects the premium from you and pays what Medicare tells him to pay – he’s not making any benefit or coverage decisions. You can safely choose the lowest cost provider.
In Washington State where I live, you can move to another Medigap insurer at any time. It’s called “Annual Guaranteed Issue” – but you have to buy the same type of policy from the new insurer. You can’t trade a High Deductible Plan G for a full coverage plan. If United American is no longer the Medigap insurer with the lowest premium, I’ll quickly move to the carrier that is. But these rules about when and if you can change insurers vary by state to state
Part B is anything that is outside of the hospital. These expenses may not add up to the astronomical totals of hospital bills but they include testing (MRI, X-rays, blood tests, chemotherapy, etc.) and doctor visits which quickly add up into the thousands.
Grandma did know what she was talking about. Unless you have had major medical care and seen the EOBs, like I have, be careful what you tell people.
Actually, I believe Wendy’s gran did steer her right. These costs she itemised were for outpatient (plan B) procedures…even if they took place within a hospital setting. If my husband’s experience is anything to go by, there will be similar visits in the future
Hospital facilities are frequently used for outpatient procedures that don’t require admission…even if you’re hanging around all day for one reason or another.
Yes. That’s a major, for-profit hospital scam under Medicare. They admit you “for observation” rather than a “real” inpatient hospital admission for treatment.
If you’re admitted to the hospital, all those Part B charges for labs, x-rays, etc. become Part A and your cost is limited to the $1,676 Part A deductible. Doctor’s charges would still be Part B, even if you are admitted to the hospital, but it’s 20% of the Medicare reimbursement, not the 10 times the cost that the doctor would charge to a private insurer.
The private insurer ALSO has a negotiated rate for the service that is way less than the MASSIVE “rack rate”. And the doctor can only charge the negotiated rate. The only people being billed the rack rate are people with no insurance at all (but they rarely pay so it’s just a sham bill essentially).
I think you mean the monthly premium. The annual deductible for Medigap plans is fixed by CMS each year and the same in all the states. It rises with inflation
Washington State uses a Community Rating system to calculate Medigap premiums, so everyone from age 65 to 100+ pays the same monthly premium. This method tends to prevent insurers from gaming the system.
A 65-year-old would pay about 1/3 less in an Attained Age state where the premium rises as you age, but then more than double that at age 90. Most states use the Attained Age system since it tends to benefit the insurer – and the insurers have bought & paid for the state legislature.
True, but when people are talking about $1 million hospital bills, they’re looking at the “rack rate”. The Medicare reimbursement is often 90% less.
Back during my 27 years of buying a private, individual health plan, I found that paying cash for a doctor’s bill was often 20% less than the so-called “negotiated” insurer’s rate. Health insurance is just a completely crooked business, built on deception, skim, and scam.
As you might have figured, I have seen the EOBs. Grandma doesn’t know what she’s talking about. Don’t make you’re health insurance decisions based on old wives tales. Understand the arithmetic
From Dr. David Belk’s website:
The Medicare Part A deductible was one of the first things they covered in the SHIP seminar I attended in 2020, a few months before I turned age 65.
I asked the presenter, "What can you expect to pay on a $100,000 hospital bill under Medicare?
Presenter, “$1,406” (The Part A deductible in 2020)
Me, “What happened to the 20% that Medicare doesn’t pay?”
Presenter, “That doesn’t apply for Part A”
If you don’t understand the difference between Part A and Part B, and the fact that you’re paying 20% of the Medicare reimbursement under Part B, not the super-inflated regular charge, you don’t understand Medicare.
The whole Medigap/Medicare Advantage insurance industry is based on you not knowing the arithmetic. It may well be that your “Tax Aid local manager” is just better informed than you are, has done the arithmetic, and determined that he can handle the Medicare copays without letting the for-profit insurance industry take a big piece of his hide. The Medigap insurers skim off 20% of the premiums collected for essentially doing nothing – Medicare-CMS is doing all the work for them. Why would you involve them if you didn’t need to?
But it seems to me that Wendy does understand the arithmetic and is making a correct assertion.
Wendy distinctly stated that the EOBs she’s seen thus far are for her outpatient CT angio and associated stuff ONLY…the bills that are covered by Medicare Part B and supplemental insurance (she did, she did, I know she did…I checked and there’s no mention of EOBs for the hospital admission for the open heart surgery and subsequent care) As accurate as everything else in your post might be, it’s not relevant to her (or anyone else’s) outpatient experiences.
Thing here is…and based on your own accounts of your healthcare needs thus far in life…you’re not personally familiar with what sort of procedures can be performed nowadays as an outpatient. Yet. That’s a good thing, of course, and long may that state of affairs continue …but it leaves you without the understanding of just what out of pocket bills it’s possible to be faced with should a serious medical issue arise as an emergent problem.
Relevant question to understanding the bills one might receive for outpatient care…had you even heard of the conditions/diagnostics/treatment associated with Wendy’s aortic stenosis or my husband’s aortic incompetence before either of our accounts?
Not at all. I’ve had outpatient eyelid surgery, outpatient colonscopy, both under private insurance pre-Medicare, and under Medicare, post age 65. I’m very familiar with the costs incurred – especially for a hospital admission which is the most expensive thing that can happen to a person.
That’s why I was expecting Medicare Part A to be “The $1,676 deductible, plus 20% of everything beyond that.” Like Wendy’s grandma, I was brainwashed by my pre-age 65, private insurance experience.
No more. Pay attention to the arithmetic, it will set you free.
Eyelid surgery and colonoscopy…exactly my point regarding your minimal experience of the costs that can be incurred as an outpatient with high end needs that can be recurring. Not dismissing them as important to you…but not quite the sort of higher end stuff that Wendy was talking about as a door opener for what sort of medical bills it’s possible to incur just to stay alive
Isn’t the point of this discussion not about the surgery but to make sure that Wendy or anyone else isn’t taken by the medical system. I find it confusing and realize I have a lot to learn but it seems if you can do everything on Part A it would be much cheaper than on Part B. My question is how do you stay away from being put on Part B. If it is the doctors and hospital’s choice it sounds like there is nothing you can do.
The reason for a hospital admission isn’t to make it cheaper for a Medicare beneficiary…but because it’s medically necessary. Third party payers themselves apply quite strict criteria to this decision making so there’s very little option for choice based on cost to the individual. Cost aside, there’s plenty of downside to being admitted to hospital for a stay so anything that can safely be done on an outpatient basis is likely to be done that way. The same as pretty much anywhere in the world with third party payment for medical care.
I would’ve loved to check into my local medical hotel for a few days post lapiplasty pampering. Medicare would’ve had other ideas
So it’s a lottery? Part A only applies to hospital stays and Part B is for outpatient? So for every Part B I will be paying 20 percent of the cost? Does that sound right?
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