How Does Medicare Supplement Insurance Work?

Here is one example how having Medicare (Medigap) Supplement Insurance can lower your financial risk.

Marily Grady, age 67, has a total hospital bill of $28,000 based on the following:

  • $20,000 hospital expenses
  • $5,000 approved physician expenses
  • $3,000 skilled nursing care expenses
    (30 days at $100 per day)

In 2004, Medicare paid $25,044 of the $28,000:

  • $19,124 (the hospital expense minus the $876 deductible)
  • $3,920 (80 percent of the approved physician expenses)
  • $2,000 (all expenses for the first 20 days of skilled nursing care)
  • $0 (skilled nursing care expenses in excess of $109.50 for days 21-100)

That left Marilyn to pay the remaining $3,051.

Had Marilyn had Medicare Supplement Insurance, the coverage would have paid $3,051 (the amount not covered by Medicare), bringing her total to $0.

  • $876 (Part A deductible)
  • $1,080 ($100 Part B deductible and
    20 percent of the remaining physician
    expenses approved by Medicare)
  • $1,095 ($100 a day for days 21-30 of skilled nursing)

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