What Is Medicare Part A and How Does it Work?
Let’s just use some plain English to describe this for you. As a practical matter, Medicare Part A is coverage for in-patient Hospital bills. It has some limited benefits for some other things, such as a very limited stay in a Skilled Nursing Facility (nursing home) and very limited Home Health Care, which I will go over with you later in this article.
For most people, Medicare Part A costs you nothing if you have worked under and paid into the Social Security System for at least 40 Calendar Quarters (10 years) during your working lifetime. You may also qualify even if you haven’t worked enough quarters under the Social Security System. For example, your spouse may have worked for at least 40 quarters under the Social Security System in his or her working lifetime and you would qualify for Medicare Part A benefits under his or her earnings. You may also qualify if you are divorced from a spouse who has or had enough quarters and your marriage to that person lasted at least 10 years. Widows who qualify for a Survivor Benefit automatically qualify for Medicare when they reach age 65.
If you cannot qualify for benefits through your own or someone else’s work history, you can still get Medicare Part A but you will have to pay for it. The Medicare Part A premium for 2019, is $240/month if you have worked under and paid into the Social Security Administration for between 30 and 39 quarters. If you have worked under and paid into the Social Security System for less than 30 quarters during your working lifetime and cannot qualify under a spouse’s earnings record, the premium for Medicare Part A is $437/month. A “Quarter” means 3 calendar months. There are, therefore, 4 calendar “Quarters’ in a year.
For further information, call Social Security at 1-800-772-1213 or go to www.SocialSecurity.gov.
A few other quick notes:
1. Although you may not qualify for full Social Security benefits until age 66 or later, you can qualify for Medicare at age 65. You might be able to qualify sooner if you have been on Social Security Disability for two years. End Stage Renal Disease (total kidney failure) dialysis patients can qualify, no matter their age, immediately upon diagnosis.
2. If you are still employed and are covered by an Employer Sponsored Group Health Insurance Plan (ESGHIP), you probably should enroll in Medicare Part A as soon as you are eligible. That coverage is free and is required under most group plans, anyway. In order to preserve your 6 month Open Enrollment Period for a Medicare Supplement, you should NOT enroll in Medicare Part B until you are ready to leave your ESGHIP. You should probably also not sign up for a Medicare Part D Prescription Drug Plan if your ESGHIP has prescription drug coverage that is at least as good as the Medicare Standard Plan. (Medicare’s Standard Plan, which no Medicare Part D Prescription Drug plan, sold by private insurance companies only, offers anymore, has a $400 deductible and then pays 75% of the cost of all of your medications until the actual retail cost of your prescriptions reaches $3,700 thereby putting you into the “Donut Hole, or Coverage Gap.) You will not be required to pay a Late Enrollment Penalty, no matter how long you wait to sign up for Medicare Part B or Part D if you can demonstrate to Medicare when you do sign up that you have had what’s called Other Creditable Coverage. Your Employer’s Human Resources (Personnel) Department can give you the best guidance on these matters.
3. When you leave your ESGHIP and choose Medicare as your Primary Carrier, you MUST notify Medicare Coordination of Benefits (COB). Their number is 1-855-798-2627. If you don’t contact them when you come off of your group plan at work, they will assume that it is still in force for you and your claims will get all messed up. Here’s why:
Medicare COB maintains records on every Medicare Beneficiary. These records are cross referenced with the IRS. If you are 65 years of age or older, or if you are approaching Medicare age, Medicare COB already knows, in most cases, if you are covered by an ESGHIP. In fact, if you are self-employed, Medicare COB often assumes that you are covered by an ESGHIP. In almost every instance, ESGHIP is considered primary by Medicare COB and Medicare considers itself to be secondary.
What this means is that Medicare will deny your claims believing that your group insurance must pay first. Your old group policy will not pay because you are no longer covered under that plan. The real problem is that neither of these two parties talk to each other so Medicare COB doesn’t know you have left the group and have chosen Medicare as your primary carrier. Moreover, since a Medicare Supplement supplements Medicare, they can’t pay, either, because Medicare has not yet paid. Can you see the mess you will be in if you find yourself embroiled in this?
Unlike a lot of problems with government run healthcare, this one is pretty easy to fix. All you have to do is call Medicare COB (Coordination od Benefits) and that number again is 1 855 798-2627. Have your Medicare Number handy. It’s on your Medicare Card. After you go through the prompts and their recorded messages, you’ll be able to talk to a real live person. Tell them when you left your ESGHIP and they will ask you a series of questions to determine if there is any other entity besides the group plan that could be considered primary in some circumstances such as liability insurance carried by someone else who, because of their liability for your injuries, could be expected to pay for your medical expenses.
One note of caution: Make sure they correct the records for not only your medical (Doctor and Hospital expenses) but for your prescriptions as well. I’ve actually seen it happen that the Medicare COB Customer Service Representative on the phone adjusts the records for your Medicare Part A & Medicare Part B expenses but totally forgets to make the same adjustment for your Prescription Drug expenses. You’ll save yourself another phone call if you make sure they handle both cases at once.
4. Even though you can qualify for Social Security benefits as early as age 62, at a reduced benefit level, you cannot qualify for Medicare, unless you meet the disability requirements I mentioned earlier on this page, until you are 65.
So, How does it actually work?
When you are admitted to a hospital, you begin what Medicare calls a Benefit Period. That Benefit Period lasts for as long as you are in the hospital and for 60 days after you are discharged from the hospital during which you were not admitted to a hospital or nursing home. If, during that 60 days, you have to be readmitted to the hospital or go into a Medicare participating nursing home, even if it is for a different diagnosis than your first admittance and even if it is in a different hospital, you are considered to still be in that same Benefit Period so you will not be charged a new deductible. If you stay out of the hospital for longer than 60 days, however, and then go back in, then you begin a new Benefit Period no matter your diagnosis.
This is important to understand because Medicare imposes a rather large deductible for each Benefit Period. For 2019, that In-Patient Hospital Deductible is $1,364. So, every time you begin a new Benefit Period, you will be responsible for a new In-Patient Hospital Deductible. Virtually any Medicare Supplement policy (except the A Plan Medicare Supplement) will pay all or a good portion of that deductible for you any time it is imposed.
Medicare pays hospitals under a system known as DRG or Diagnosis Related Groups. Basically, when you are admitted to the hospital, the hospital already knows, based on your admitting diagnosis, how much Medicare will pay them for your stay and how many days Medicare will pay for you to be there. If the hospital cannot treat you within those limits, then the hospital must absorb any part of your bill that is above the DRG allowable payment. They cannot charge you for the difference nor can they charge your insurance company for the difference. They can, and will, bill your Medicare Supplement insurance company for the In-Patient Hospital Deductible.
Conversely, if the hospital can treat you for less than the allowable DRG amount, they get to keep the excess. This is supposed to encourage more efficient patient care. Whether it does or not is an open question. Too often, it results in a patient being discharged from the hospital before they are really ready to go home.
Because of the DRG system of reimbursement (payment to the hospital), very few patients ever stay in the hospital past the time limit imposed by the DRG requirements.
What if I Have an Extended Stay in the Hospital?
In the extremely unlikely event that you do stay beyond those time and dollar limits and Medicare continues to cover you (an example would be if you were in the Intensive Care Unit with a punctured colon or if you were comatose but not expected to remain in that state indefinitely), here’s how Medicare Part A would continue to cover you:
During your first 60 days of covered hospital confinement, the In-Patient Hospital Deductible would be all you would be responsible for. Again, your Medicare Supplement would, in most cases, (except the A Plan Medicare Supplement) pay that for you.
If you’re still in the hospital after that initial 60 days, Medicare will pay everything but a daily copay of $341 per day for the next 30 days. Any Medicare Supplement, even the A Plan, would pay that for you.
If you’re still in the hospital after that initial 90 days (the initial 60 plus the next 30), Medicare will pay everything but a daily copay of $682 per day for the next 60 days. Any Medicare Supplement, even the A Plan, would pay that for you.
This 60 day period is called your Lifetime Reserve. It is a use-it-and-lose-it proposition. Every time you begin a new Benefit Period, you will always have at least 90 days of in-patient coverage under Medicare Part A. But if you have to stay beyond that 90 days and Medicare continues to cover your stay, any further days of covered hospital confinement you use will not be available to you the next time you go over that 90 day limit.
For example, let’s say you were confined in the hospital for 100 days and Medicare covered that entire confinement. You used the 90 days that is always available to you and 10 days of your 60 days of Lifetime Reserve. If you ever have to be hospitalized again and begin a new Benefit Period, you will still have your 90 days that you always have but, this time, you will only have 50 days of your Lifetime Reserve left because you used 10 days of it on a previous confinement.
If you ever stay for longer than 150 days in a Benefit Period (the initial 90 that you always have plus the full 60 days of your Lifetime Reserve), then Medicare Part A quits you like a bad habit. If you have a Medicare Supplement, that plan will step in and pay 100% of the rest of your hospital bill for the next 365 days.
I want to repeat, if you ever do start another Benefit period, even though you have exhausted your Lifetime Reserve, you will still have 90 days of in-patient hospital care available to you.
Let’s be real. The chances that you will survive a 150 day stay (that’s 5 months!) in the hospital, let alone 515 days (the 150 days that Medicare and your Medicare Supplement policy cover together, plus the 365 additional days your Medicare Supplement policy covers), are virtually nil. That’s 17 months!
Let’s keep in mind that we are talking about insurance coverage for the elderly and the disabled. Such a lengthy hospital stay would be a practical impossibility for almost anybody in that age bracket. Yes, it is possible but the stars would have to be in perfect alignment before Medicare would allow such a lengthy stay, in the first place, and your body could withstand an ailment or injury that would require such a lengthy stay.
I have been in the health insurance business for well over 4 decades and, in all that time, I have had fewer than a half a dozen clients that have stayed long enough to use any of their Lifetime Reserve days and none of them lived long enough to exhaust them.
What Else Does Medicare Part A Cover?
OK. I said I would discuss Medicare Part A’s other coverages for you. Medicare Part A will cover a nursing home bill but only if that nursing home is a Medicare participating facility (which means they allow Medicare to pay them, rather than you and they agree to accept what Medicare allows as the total bill) and only if Medicare approves your stay there.
Generally speaking, Medicare will approve a short stay in a nursing home for recuperative reasons. For example, if you break a hip and need to stay in a nursing home to recuperate, Medicare usually will cover that but only for 20 days. The amount the Skilled Nursing Facility is allowed to charge you for that 80 day period is $170.50 per day, no more. If you have a Medicare Supplement, it will cover you there, for the same amount, for another 80 days. After that, you will either be discharged or any further nursing home expenses will be your responsibility.
Nationwide, Medicare covers less than 2% of all nursing home bills so you can see, they cannot be considered a reliable source of money should you ever need to be confined in a nursing home.
There are a number of ways you can prepare yourself financially should you need to be confined in a Nursing Home. One of the better known ways is a Long Term Care insurance policy. There are several insurance companies that sell those. The trouble with a Long Term Care policy is that you may pay on it for 20 or 30 years and die at home, having never used it. All of that premium that you paid would stay with the insurance company. Yes, you had the “umbrella” of that coverage if you ever did need it, but it might seem a waste to you or your family if you never get any benefits out of that policy.
Another option is to consider a Long Term Care Annuity. That policy would pay benefits should you go into the Nursing Home and, should you pass away before you ever used any or all of that annuity benefit, it’s value, would pass to whomever you had designated as your beneficiary on that policy.
A third option is to buy a Long Term Care Life Insurance policy. Those policies will allow you to use a portion of the face value of that policy for Nursing Home care and, if you should pass away while you’re a resident in a Nursing Home, the remainder of the policy’s face value would be paid to your beneficiary and/or the Nursing Home as its interests would appear.
Long story short, everybody worries about having the right Medicare Supplement and, while that is important, the expense that will literally wipe out all of the money you have spent your entire life amassing, is a lengthy stay in a nursing home. And that can be avoided entirely with a little well-advised and diligent pre-planning on your part. Any such coverage would be greatly enhanced by the addition of a home health care benefit so don’t leave that out of your considerations.
Frankly, I would rather take a whoopin’ than go to a nursing home but the day may come when I will simply have no choice. There will come a time when I can no longer be cared for at home, a time when, if I fall, not only can I not get up by myself, but my wife can’t pick me up, either. There will come a time when I am no longer in control of my own bodily functions and that is not a duty I would be willing to force on any of my family members.
Some States participate in a Partnership Program with Medicaid. Basically, that means, if you exhaust the benefits of your Long Term Care policy and are still confined in a nursing home, the State will step in and pay the same benefits your policy was paying until it has paid the same amount that your insurance policy paid. Effectively, that doubles the length of time you can be cared for in a nursing home without having to spend any of your own resources. But you must have a Partnership Policy. You should insist on it when working with your agent to get the coverage in force. A really good agent will make sure that such a policy is made available to you.
However, if you’re still in the nursing home once all of that has been paid, then you will need to spend your own resources down to the acceptable Medicaid threshold before Medicaid will step in and take over that expense for you. There are some requirements that must be met and they may differ from State to State but, in Texas, you must have a policy that is Partnership qualified. Check with the Texas Department of insurance for those specifics. They can be reached at 1 800 252-3439 or you can find them on-line at www.tdi.texas.us.