MEDICARE FOR THE LAZY MAN
Making Medicare Almost Fun Since 2013
By Douglas B. Jones, CLU, RHU
Dear Doug: I hear people say that Medicare has "gaps." I'm about to turn 65 and I keep seeing advertisements for something called Medigap. Are the gaps really that serious or is this just insurance industry scare tactics?
— Skeptical in Scottsdale
Dear Skeptical,
The gaps are real. The scare tactics are also real. Let me separate the two for you, since confusing them can lead to frustration and, potentially, big expense!
Original Medicare consists of two parts. Part A covers inpatient treatment — hospital stays, skilled nursing facilities, hospice, and limited home health care. Part B covers outpatient treatment — doctors' office visits, diagnostic testing, emergency care, and preventive services. Together they form a solid foundation of health insurance. What they do not form is complete protection.
Here is what you would actually owe in 2026 if something went seriously wrong and you had no supplementary protection. For a hospital admission, there is a deductible of $1,736 for the first 60 days. This would be extremely unlikely, but if you’re still hanging in there on day 61, the daily co-pay jumps to $434 — and keeps climbing the longer you stay. This is a “benefit period” calculation and there could be several benefit periods in a single year.
For outpatient services under Part B, you pay the first $283 annually and then 20% of every Medicare-approved charge for the rest of the year — with no upper limit on that 20%. None. A patient requiring $100,000 in outpatient treatment, not an unimaginable figure for cancer care or some joint replacements, would wind up owing $20,000 of it.
A Medicare analyst once did the math on a truly catastrophic scenario — every possible thing going wrong that could go wrong in a given year — and arrived at over $900,000 in potential annual exposure for a Medicare participant with no supplement. That number is extreme and improbable, but the unlimited liability is genuine.
This is where the Medigap insurance comes in, which is just another word for Medicare supplement. A supplement policy fills those gaps. With Plan G, the most comprehensive supplement available to new Medicare eligibles, your entire annual exposure is $283 — the Part B deductible — and that's the end of it. Medicare pays its share, the supplement pays the rest, and you go back to thinking about more entertaining things.
With High Deductible Plan G, that worst-case annual exposure rises to $2,950, but your monthly premium drops considerably. For most people in most years, the premium savings far outweigh the additional risk exposure.
So: the scare tactics are real. The substantial commissions earned by agents who use fear to sell expensive products are also real. But the underlying gaps that make a supplement worth buying? Those are absolutely real too. The good news is that protecting yourself doesn’t require spending a fortune. It requires spending the right amount on the right plan at the right time.
Douglas B. Jones, CLU, RHU is the author of Medicare for the Lazy Man, now in its 2026 edition, and host of the Medicare for the Lazy Man Podcast. His services as a Medicare insurance agent are always free of charge. Contact him at www.MedicareForTheLazyMan.com
