Nine Things to Know About Medicare Supplement Plans (Medigap)Many people, both young and old, are surprised to learn that Medicare is not free. Though many of us have paid into Medicare for 40 years or more, we still pay for Medicare benefits whether we use them or not. This is the reason I get upset when I hear people call Medicare an entitlement program for seniors.

President Lyndon B. Johnson signed Medicare into law on July 30, 1965. Original Medicare contained two parts: Part A, which covers hospital costs, and Part B, medical insurance that covers doctors’ fees, lab tests, durable medical equipment, and so forth. Through the years, other parts were added, like Part C Medicare Advantage plans and Part D Prescription Drug plans.

If you or your spouse has paid Medicare taxes for 40 quarters (10 years), you will not pay a Medicare Part A premium. You will, however, pay a Medicare Part B premium, which for a person enrolling in Part B in 2019 will be $135.50 per month. A person who has an annual income of more than $85,000 or a couple that has an annual income of more than $170,000 will pay more for their Part B benefits.

So far, this sounds like a good deal. If you meet the above qualifications you do not pay a Part A premium, and people making less than $85,000 a year will only pay $1,626 annually (135.50 x 12) for their Part B medical insurance. However, as they say in the infomercials “But wait! There’s more!” Medicare is different from the health plan you had through your employer. Medicare requires that each person has his or her own Medicare plan. An eligible married couple will pay $3,252 annually ($1,626 x 2) for Part B medical insurance.

The Medicare Part A (hospital cost) deductible for 2019 is $1,364 per 60-day period. You might think that $1,364 is not a bad deductible for hospital costs these days. However, Medicare Part A only covers semi-private rooms, meals, general nursing, and drugs that are part of inpatient treatment during the first 60 days of a hospital stay. Doctors’ services, lab tests, and so forth are paid under Medicare Part B. Medicare Part B has an annual deductible of $185.00 and then an 80/20 split for Medicare Part B services, with Medicare paying 80% and the beneficiary or their plan paying the remaining 20%.

You can see that under original Medicare, a hospital stay can become quite expensive. Many people choose to purchase either a Medicare Advantage Plan or add a Medicare Supplement Plan (you may purchase one or the other but not both) to cover the deductibles, co-insurance, and co-pays not covered by original Medicare.

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