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Dissecting Health Insurance: Medicare Part A

Medicare is the federal government’s health plan for seniors. There are some individuals that qualify for Medicare coverage based on other criteria, but for most cases, age 65 qualifies one for enrollment in Medicare.

Understanding Medicare

Medicare includes 4 different categories, known as Parts A, B, C, and D. Each Part covers different aspects of the cost of medical care. Today we are discussing Medicare Part A.

What is Medicare Part A?

Basically Part A covers institutional care. This includes hospital or skilled nursing care. If you are in the hospital for pneumonia or a hip replacement, Part A will pay the hospital’s portion of the bill. It does not cover the fees billed by the doctors caring for you during your hospital stay. Most doctors are not employed by the hospital but work for themselves or some other company. They bill separately from the hospital and Part A does not cover these charges.

If you have a short hospital stay but require a stay in a skilled nursing facility for additional recovery, Medicare will pay the skilled nursing facility fees. Again, the physicians caring for you during this stay will bill separately and this is not covered by Part A.

Who qualifies for Medicare Part A?

Medicare Part A is tied to the Social Security program. If you, or your spouse, have worked enough over your lifetime, and paid Medicare and Social Security taxes, you will qualify for Medicare Part A coverage. If you do not qualify based on your work history, you can sign up for Part A and pay the monthly premium.

Do I have to sign up for Part A?

Usually the answer is no. You are automatically enrolled in Medicare when you start collecting Social Security benefits. If you do not receive Social Security benefits or qualify for Medicare coverage for some reason other than age, you may have to sign up.

How much does Part A cost?

Medicare Part A does not have any monthly premiums for most individuals. If you do not qualify for Medicare Part A based on your work history, you may have to pay a premium, currently $407 monthly.

There are some costs that you should be aware of regarding Part A though. The annual deductible for Part A coverage is $1260. This is the amount you will be responsible for before Medicare starts to pay anything. A day in the hospital is usually well over $1000, so pretty much any stay in the hospital will exceed this deductible.

So, your first stay in the hospital for the year, you will pay $1260. For Days 1 through 60, there is no daily co-pay. After Day 60 there is a daily co-pay of $315. This lasts until Day 90. So if you are in the hospital or skilled nursing facility for 3 months, you would pay the $1260 deductible, then pay $9450 for the third month of hospital or skilled nursing stay (Months 1 and 2 are covered by Medicare), totaling $10,710. Again, it is highly unlikely you would be in the hospital for 90 days, but possible you could be in a skilled nursing facility that long. Medicare has specific criteria for patients requiring skilled nursing care and this is not the same as simply staying in a nursing home. Most nursing home stays are not covered by Medicare Part A because patients don’t meet the government’s criteria.

After Day 90 there is a special situation that arises. Each individual has 60 “reserve days” that come into play after Day 90. You only have 60 of these days for your lifetime and cannot get more. You only use these reserve days after Day 90 of hospital or skilled nursing facility for a given year. These “reserve days” have a daily co-pay of $630. After you use up your 60 “reserve days”, you get no Medicare Part A benefits and pay the entire cost of care for the remainder of that year.

Can I refuse Medicare Part A?

The only way to refuse to participate in Medicare Part A is to not receive Social Security benefits. Some individuals, for reasons of religious beliefs, choose not to participate in certain government programs. The courts have ruled that you may refuse your Social Security benefits alone and still participate in Medicare Part A or you may refuse both Social Security benefits and Medicare Part A coverage, but you cannot refuse Medicare Part A and still receive Social Security benefits.

What if my doctor does not accept Medicare?

Medicare Part A covers hospital care. If your doctor does not participate in the Medicare program, Medicare (Part B) will not cover the fees billed by your doctor but Part A will still cover the hospital fees, even if you are being treated by doctors who do not bill Medicare. The hospital will bill separately from your doctor and one bill does not affect the other. For major surgery (like hip replacement or heart surgery) or extended hospital care, the majority of the cost of treatment is the hospital bill, not the doctor’s charges. Recent analysis showed that for the Medicare program as a whole, doctor’s charges make up about 10% of the cost of Medicare.

In summary, there is no monthly premium for Medicare Part A and most individuals are automatically enrolled when they start receiving Social Security benefits. The deductible each year is $1260, and the first 2 months of institutional care (hospital or skilled nursing facility) have no co-pay. After the second month there is a daily co-pay of $315.

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