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Most Medicare enrollees know that Medicare has parts, A, B,C, and D.

It is necessary to detail Medicare part A and B benefits and cost shares to understand Medigap Policies.

Medicare part A is a hospitalization benefit. It covers medical, mental health,  and skilled nursing facility.   For hospital admissions and mental health inpatient admissions portion of the bill is left for the beneficiaries to pay. That is called a deductible.  In 2013 the Medicare part A hospitalization deductible is $1,184. It covers the first 1-60 days. The 60 days counter runs even if the patient is discharged and readmitted within this 60 day window. From days 61-90 the patient enters a per day coinsurance liability period, which will cost them $296 per day. From days 91-150 days, called a “lifetime reserve days” carries a $592 per day coinsurance.

The complication comes in how Medicare provides these benefit periods.  Once discharged from a hospital the counter starts and ends at 60 days. Once a person is “facility free” (not hospitalized) for 60 days the Medicare benefit periods starts from day 1 again.  This is good in a sense that benefits are available again, but bad because they are liable for the deductible yet again.

Skilled Nursing Facility services are covered only if it followed by a minimum of 3 days hospitalization and the patient is in need of rehabilitation.  There is no liability for the first 20 days. From day 21-100 there is a $148 per day coinsurance. Medicare does not cover Skilled Nursing Facility services behind 100 days.

Lifetime reserve days don’t start over; once they are used they are gone. Medicare does not pay medical hospitalizations behind the continuous 150 days. In addition there is a lifetime limit of 190 days for mental health hospitalizations.

Medicare part B covers doctors, laboratory, outpatient hospital, medical equipment, infusions, diagnostic services, etc.  Basically part B is coverage for anything that is not hospitalization. There is an annual deductible and a cost share of 20% in most cases. In 2013 the annual deductible is $147.  Medicare pays most other services at 80% of a locally approved Medicare rates.

Medicare supplemental polies are purchased by beneficiaries to cover the above mentioned additional cost.  These plans are formulated and approved by the Federal government. Policies lettered from A to N. There are slight differences in actual plan offerings from state to state. However, the actual benefit package remains the same. Plan A offers basic benefits, plan B to D gives slightly more with each progression of the letter. The full Plan F offers the most benefit, including part B excess charges.  Plan G covers most, with the exception of part B deductible.  Plan K to N are the mixed plans with partial benefits and higher cost shares.  Plan N offers a unique mix of regular and copayment based benefits.

Prices for these plans are based on the state and often county where the beneficiary lives.  Cost is between under $100 to about $400. Again, it is based on geographic location, plan coverage, and insurance company.