In the first post of the Medicare 101 series we focused on the basics of Medicare: What is it, who qualifies for care, and what are the different layers of the Medicare system?
This post will focus specifically on Part A of Medicare to help you begin to understand costs and coverage available. Better understanding the specifics of Part A will help you fine-tune your plan for health care expenses in retirement.
Part A (Hospital Insurance) – What does it cover?
There are 4 major coverage components of Part A:
Inpatient Hospital Care: Being enrolled in Part A, you will receive coverage for the following hospital expenses:
- The cost of a semi-private room
- Meals during your hospital stay
- Nursing services
- Medications that are part of your inpatient treatment at the hospital
- Any other services and supplies from the hospital that are deemed necessary by a doctor
To activate the above benefits, the following must occur:
- You are admitted to a hospital as an inpatient under an official doctor’s order, which says you need inpatient hospital care to treat your illness or injury
- You are admitted to a hospital that accepts Medicare (the Medicare website has a link to research hospitals that accept Medicare)
It is important to note that Part A does not cover the following services while you are in the hospital:
- Private-duty nursing
- Private room (unless it is determined to be medically necessary)
- Cost of the television and phone in your room (if there’s a separate charge for these items)
- Personal care items like shampoo, razors, or slippers
- Visits from the Doctor (this will be covered under Part B, which is your medical insurance)
Skilled Nursing Care: As a beneficiary of Part A you are also entitled to the following services in a skilled nursing facility:
- The cost of a semi-private room
- Meal during your stay in the skilled care facility
- Skilled nursing services
- Rehabilitation services, if they are medically necessary to treat your illness
- Medical social services
- Medications received while in the skilled care facility
- Medical supplies and equipment used as part of your skilled care
- Ambulance transportation to nearest provider if the required services are not provided at your current facility
There are specific requirements for skilled nursing care to be covered under Part A:
- Admission into a skilled care facility must follow a 3 day required hospital stay for a related illness or injury
- A doctor must certify that you need daily skilled care that otherwise could not be provided at home
Home Health Care: Medicare Part A will cover certain home health care services if they are deemed medically necessary and ordered by your doctor. These services include:
- Part-time or intermittent skilled nursing care (not full-time care!)
- Physical therapy
- Speech-language pathology services
- Occupational therapy
- Medical social services
- Part-time or intermittent home health aide services
- Some costs related to durable medical equipment if ordered by your doctor
Just like skilled nursing care, there are specific requirements that must be met for home health care to be covered under Part A. To qualify, services:
- Must be medically necessary and part-time services that require some form of skilled care or therapy. Again, full-time care will not be covered.
- Must be specifically ordered by a doctor and you must be home bound.
- Must be administered by a Medicare certified home health agency.
Hospice Care: if you are determined to have a terminal illness (a life expectancy of 6 months or less) by your doctor then Medicare Part A will cover hospice care which might include:
- All items and services needed for pain relief and symptom management, including drugs and medical equipment
- Medical, nursing, and social services
- Aide and homemaker services
- Spiritual and grief counseling
Hospice care may be delivered in your home or a local Medicare facility such as a nursing home.
Part A (Hospital Insurance) – What does it cost?
The great news is that unlike other parts of Medicare, Part A does not require a monthly premium for most seniors. Eligibility for Social Security benefits is the main trigger that determines if you will need to pay a premium for Part A coverage.
To qualify for “premium-free” Part A coverage, the following must apply:
- You are already receiving Social Security benefits
- You’re eligible to get Social Security benefits but have not yet filed for them
- You or your spouse had Medicare-covered government employment
Once it is determined whether or not you will need to pay a premium for Part A, your costs will be the following:
Inpatient Hospital Care
- Cost per benefit period: In 2019, you pay a deductible of $1,364 for each benefit period. A benefit period begins on the first day of inpatient services and ends after the patient hasn’t received care in a hospital or skilled care facility for 60 days. Each benefit period is limited to a total of 90 days of inpatient hospital coverage.
- There is no limit to the number of benefit periods you receive, but the deductible will apply when each new benefit period is activated.
- On top of the $1,364 deductible for each benefit period, there is also an additional coinsurance per day based on the number of days you need to stay in the hospital:
- $0 coinsurance for days 1-60
- $341 per day coinsurance for days 61-90
- You pay all costs above 90 days in the hospital
Note: You also have an additional lifetime “reserve bank” of 60 days to use when you run over the 90 day limit in each benefit period. This helps you avoid needing to pay 100% of the costs from day 91 and beyond. There is a $682/day coinsurance for using each lifetime reserve day
Skilled Nursing Care
- You pay nothing for days 1-20
- You pay a coinsurance of $170.50/day for days 21-100
- You pay 100% of costs after day 100
Home health care
- $0 for home health care services.
- For certain medical equipment that is needed in your house, you will pay 20% of the Medicare-approved amount
- $0 for hospice care
- There may be an additional copayment of up to $5 for certain drugs that need to be administered as part of your care
This wraps up our summary of Medicare Part A. Remember, an important component of a comprehensive retirement plan is accounting for the various parts of Medicare and what they mean for your out-of-pocket costs.
To learn more about Medicare and the specifics, the government has a great resource that it publishes annually, titled Medicare & You that reviews the Medicare system and coverages in greater detail.