The Importance of Having a Medicare Supplement Insurance Plan  

HNWElder Care Law, Elder Law

  • Medicare pays for hospital and doctor costs for persons over age 65
  • Not all medical costs are covered by Medicare
  • This article discusses Medicare Supplemental Insurance Policies to cover unpaid Medicare bills.

MedicareOccasionally, clients turning age 65 ask me what Medicare supplement plan to choose when it comes to the many Medicare Supplemental plans.  There are gaps (meaning “deductibles” that must be paid out-of-pocket) in Medicare coverage so a comprehensive supplemental or “Medigap” policy is important to fill those gaps.  I will generally refer clients to my insurance consultant who is a knowledgeable insurance professional who focuses on the Medicare supplement market and is very adept at finding the right policy for clients.

A large majority of my clients are over the age of 65 and receive Social Security and Medicare benefits.  Medicare does not cover custodial long-term care (in most circumstances) and clients often present me with Medicare questions that are complex.

Why You Need a Medicare Supplemental Plan

A call I received not too long ago highlights the importance of these supplemental policies.  This client called because her husband, age 75, was in the hospital.   He had a heart attack which led to further complications caused by diabetes.  The result is that he has been in the hospital for an extended period of time.  She told me that he has been hospitalized for 4 months now and is within 30 days of using up his Medicaid lifetime reserve days.

Already the client has more than $30,000.00 of out of pocket costs for his hospitalization and counting.  That’s attributable to the Medicare deductible and co-pays for which her husband is responsible for.  Of even greater concern is that in another 30 days they are faced with no coverage for his hospitalization if he doesn’t make enough improvement to be able to be discharged from the hospital.

How could that be?   Doesn’t Medicare cover all hospitalization under Part A?  It does but there are many gaps in coverage.   That’s where Medigap insurance comes into the conversation.  The problem is that my client neglected to purchase a Medigap policy.  Let me explain.

The Importance of Good Medicare Supplemental Policy

Let’s look at how Medicare Part A coverage works.   Medicare will cover up to 90 days of hospitalization for a single benefit period.   There is a deductible of $1316 for days 1 thru 60.  (It changes annually, always more, never less). Days 61 thru 90 carry a coinsurance charge of $329/day.  For the first 90 days of my client’s hospital stay the out of pocket cost to him was $11,186.00.

If a hospital stay lasts more than 90 days, there are an additional 60 days of coverage under a lifetime reserve.  As the term “lifetime” suggests, this is a onetime 60 day term.  The client is in danger of running thru all of his lifetime days.  These additional 60 days of coverage also come with a coinsurance charge of $658 per day. That totals $39,480.00 out of pocket.   The client will have to pay $50,666 of his hospitalization privately.  That is a big number.

As bad as that may be, it’s small in comparison to the “tsunami” that is coming if his hospital stay extends beyond day 150.  That’s because Medicare provides no coverage after day 150, which is when a Medicare supplemental policy, known as Medigap policies, kicks in.  These policies plug the “gaps” in Medicare coverage.   A good Medigap policy will provide an additional 365 days of hospital coverage as well as provide other coverages such as, for example, paying the coinsurance charges for rehabilitation in a subacute facility for days 21 thru 100.  It can also cover his $50,666 of deductible and coinsurance charges for the first 90 days of his current hospitalization if he had this coverage.

In my client’s case, they do not have this additional coverage which they neglected to secure.  If he reaches Day 151 in the hospital, he is responsible for the entire cost.   His entire hospital bill could easily reach into the hundreds of thousands of dollars, wiping out their lifetime savings.  What other options do they have?   He could apply for Medicaid to cover his care.  Of course, that means that he and his wife will need to meet Medicaid’s financial needs based requirements which won’t be so easy.

Sound scary?  It is.  Contact me personally today to discuss your New Jersey elder care and Medicare matter.  I am easy to talk to, very approachable and can offer you practical, legal ways to handle your concerns.  You can reach me toll free at (855) 376-5291 or e-mail me at

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township Monmouth County New Jersey Elder Care Attorney


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