Most retirees believe that having Medigap insurance means they are fully protected against unexpected medical expenses. Unfortunately, this is not always the case. While Medigap plans fill many of the holes left by Original Medicare, some coverage gaps only become apparent in the event of a serious hospitalization or transfer. Whether it’s a move to a skilled nursing facility or a billing code you didn’t expect, these small details can turn into huge out-of-pocket expenses. Here are eight Medigap “gaps” you often don’t see until it’s too late.
1. Observation status is different from hospitalization
Many retirees learn this the hard way. If you are admitted on “observation status” rather than as an inpatient, your hospital stay will be billed under Medicare Part B instead of Part A. This means higher out-of-pocket costs for hospital care, and your Medigap plan may not fully cover them. To make matters worse, time spent under observation does not count toward the three-day hospitalization rule required for skilled nursing coverage. Always ask the hospital to clarify your situation in writing before or during your stay.
2. Ambulance transfers between facilities can cost hundreds of dollars
Medigap usually helps pay for ambulance services, but non-emergency transfers between hospitals or rehabilitation facilities may be denied. Medicare only approves the use of ambulances when medically necessary, not for convenience or proximity. Patients who are stable but still require transportation may face unexpected bills ranging from $400 to $800. If you or a loved one requires transportation, confirm that the transportation is medically necessary and ask if prior authorization is required.
3. Skilled nursing facilities are not always fully covered
Even with Medigap, you are only eligible for comprehensive skilled nursing coverage after you have been hospitalized for three days (not observation). Once covered, Medigap will typically pay your deductible for the first 100 days, but will not pay for extended recovery after that period. Many patients assume “recovery” automatically means coverage will continue, only to find that it ends abruptly after a lull in improvement. Be sure to verify what is medically classified as skilled nursing and custodial care.
4. Emergency limits for overseas travel are lower than you think
Most Medigap policies include foreign travel emergency benefits, but the lifetime limit is $50,000, and you must pay a $250 deductible plus 20% coinsurance. Coverage is also only available within the first 60 days of overseas travel. For retirees who travel abroad or spend the winter overseas, that cap may be reached faster than expected. Supplemental travel medical insurance can prevent a six-figure hit after a hospital stay overseas.
5. Overcharges can still creep in
If your doctor doesn’t accept a Medicare allotment, they can legally charge up to 15% more than the Medicare-approved rate. Only Medigap Plans F and G cover these “excess charges.” Retirees with new plans that don’t include this benefit may face unexpected bills, even for covered services. Always confirm that your provider accepts Medicare allocation before treatment, especially specialty hospitals and out-of-network hospitals.
6. Home rehabilitation care is not fully reimbursed
Many retirees look to Medigap to help pay for home care or therapy after a hospitalization, but these services are limited under Medicare. Coverage only applies if the care is deemed “medically necessary” and provided by an approved home health agency. Does not include personal care, assistance with daily living or meal preparation. Without long-term care insurance, these gaps can quickly drain savings.
7. There is a hidden cap on accommodations in mental health facilities.
Inpatient psychiatric care is subject to the 190-day lifetime limit under Medicare Part A. Once that threshold is reached, neither Medicare nor Medigap will cover further inpatient mental health treatment. Many retirees don’t realize that this cap is permanent—it doesn’t reset. Outpatient care remains covered, but extended inpatient care requires private pay or supplemental coverage.
8. Private rooms and amenities are not included in standard coverage
If you request the use of a private hospital room or upgraded facilities during your transfer, Medigap generally does not cover these costs unless medically necessary. Amenities such as in-room TVs, phone lines or private bathrooms may also come at an additional cost. Unless a doctor certifies medical necessity, these “comfort upgrades” will become your financial responsibility.
Why reading the fine print could save thousands of lives
Medicaid remains one of the most valuable tools for retirees, but it’s not foolproof. Many of the most costly gaps occur during emergencies, when there is no time to challenge billing codes or shipping rules. Reviewing the fine print of your plan and asking the hospital to clarify your coverage in real time can prevent huge bills later. When in doubt, a 10-minute call to your insurance company is much cheaper than a surprise invoice.
Are you or someone you know surprised by a Medigap or Medicare bill after a hospital stay? Share your experiences below to help others avoid the same pitfalls.
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