Medicare Part A
The first part of Original Medicare is Part A. This is hospital insurance, which provides coverage for inpatient care such as inpatient hospital stays, skilled nursing facility stays, home health care, or hospice care.
We mentioned costs in the last lesson, and how Original Medicare doesn’t cover everything, and we’ll get to those costs in a minute.
For Part A coverage, most beneficiaries won’t pay anything. As long as the beneficiary or their spouse has paid the Medicare tax throughout their employment for at least 40 quarters, then Part A is premium-free.
Premium refers to the amount paid or to be paid on behalf of a beneficiary for coverage under an insurance policy or other health care plan, including Medicare, usually in periodic installments.
Those who have paid the Medicare tax for fewer than 40 quarters will pay a premium depending on how many quarters they paid the Medicare tax.
For beneficiaries who paid Medicare tax for 30 to 39 quarters, they will pay a reduced premium.
If a client has paid the Medicare tax for less than 30 quarters, they will pay the full monthly premium for Part A.
Like out-of-pocket costs, Part A premium costs change from year to year.
Now, let’s talk about the out-of-pocket costs for Part A services.
First up, deductibles. The term deductible refers to the amount for which the insured is liable to pay before an insurance company will make payment on a claim.
There is a deductible for each benefit period of hospital inpatient stays and for each benefit period of mental health inpatient stays.
A benefit period is the method Original Medicare uses to measure your hospital and skilled nursing facility services.
A benefit period begins the day you’re admitted as an inpatient in a hospital or skilled nursing facility.
The benefit period ends when you haven’t gotten any inpatient hospital care, or skilled care in a skilled nursing facility for 60 days in a row.
If you go into a hospital or a skilled nursing facility after one benefit period has ended, a new benefit period begins.
You must pay the inpatient hospital deductible for each benefit period.
There’s no limit to the number of benefit periods.
Let’s break that down.
If a Medicare beneficiary is admitted to a Medicare participating hospital or skilled nursing facility on an official doctor’s order the beneficiary would be responsible to pay:
A deductible and no coinsurance for days 1–60 of each benefit period.
A coinsurance amount per day for days 61–90 of each benefit period.
A coinsurance amount per “lifetime reserve day” after day 90 of each benefit period, up to 60 days over your lifetime.
All costs for each day after you use all the lifetime reserve days.
Also, it’s important to note: Time spent in the hospital as an outpatient for observation services is in most cases not covered by Medicare.
Once those lifetime reserve days are up, the beneficiary is responsible for all costs beyond 90 days for each additional hospital stay benefit period.
Now, let’s talk skilled nursing facility stays. In most cases coverage in a skilled nursing facility is dependent on a doctor’s order upon release from a 3-day minimum, medically necessary, inpatient hospital stay for the condition for which they require the skilled care.
For this type of care, clients have a zero-dollar copay for the first 20 days, and then will have a copay for days 21 through 100. After 100 days, the beneficiary covers all costs.
What about clients who do not receive Part A premium-free?
They’ll need to decide whether to pick it up, and will have to consider the late enrollment penalty.
If they don’t enroll when first eligible, and they don’t have creditable coverage, your client would pay a 10 percent penalty on their premium when they do sign up.
The penalty lasts for twice the number of years they were eligible for Part A but did not have it.
That brings us to the end of our lesson on Part A of Original Medicare. For the details on Part B, head over to the next lesson.