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November is Long-Term Care Awareness Month

On June 30, 1965, President Johnson signed H.R. 6675, which led to the creation of Medicare and Medicaid. Under this bill, Medicare Parts A and B were created and today these benefits are commonly referred to as “Original Medicare”.

To understand Medicare, it’s important to start with Original Medicare, because Parts A and B are often considered its building blocks. Having a solid understanding of the costs and benefits of Original Medicare is important since almost everyone is required to enroll in Parts A and B when seeking post-retirement health benefits. For example, to enroll in additional benefits such as a Medicare Supplement or Medicare Advantage plan, enrollment in Original Medicare is a must. Additionally, many employer-retiree plans, Tricare, and other corporate-sponsored retiree programs require enrollment into Original Medicare as part of your post-retirement health benefits.

What is Original Medicare?

Simply, Original Medicare is health coverage managed by the federal government and is comprised of two parts, A and B. Each part covers different benefits–Part A is often referred to as hospital coverage and Part B is referred to as medical coverage. Since each part has different benefits and costs, this month’s blog will focus on Part A. Next month I will cover Part B.

What is Medicare Part A?

Medicare Part A provides benefits for inpatient hospital stays, facility-based skilled nursing care and rehabilitation, home health care services, and hospice care.

Part A works like any health plan. However, it does have some unique aspects like observation. Part A will cover an inpatient hospital stay if you meet two conditions:

  1. You must be admitted to the hospital as an inpatient after an official doctor’s order which specifically states you need inpatient care to treat your illness or injury.
  2. The hospital must accept Medicare.

Where Medicare Part A benefits become confusing is when you are admitted to a hospital and the hospital’s Utilization Review Committee reviews and approves or denies your stay while you are admitted. This is referred to as observation and has historically created confusion due to the uncertainty of your admittance being covered by Part A or not.

  • Out-of-Pocket Expenses

When utilizing Medicare Part A, out-of-pocket expenses can include premiums, deductibles, and copayments. Regarding premiums, most enrollees will receive Part A benefits without paying a premium because you or your spouse worked and paid Medicare taxes for 40 quarters or 10 years. If you do not have the required 40 hours, you can purchase Part A by paying for it. In 2022, the Part A monthly premium is $499 if you have less than 30 quarters. If you have 30 quarters but not 40, you would pay $274 per month. Please note that if you have to pay for Part A, enrolling when first eligible is important because failing to enroll will result in penalties.

Part A out-of-pocket costs change from year to year, but the coverage and benefits have remained constant for decades. For example, if you are hospitalized in 2022, you would pay a $1,556 deductible for a 60-day benefit period. It is important you understand the difference between a benefit period and an annual deductible. An annual deductible is the amount you pay in a year before your plan starts to pay benefits. Under a benefit period, it begins the day you are admitted as an inpatient to a hospital or skilled nursing facility (SNF). The benefit period ends when you haven’t received any inpatient care (skilled care or in an SNF) for 60 consecutive days. When one benefit period has ended, a new benefit period begins and another admission would create a new benefit period.

Unlike traditional health insurance policies, Part A does not have an out-of-pocket maximum. Therefore, it is so important to research and enroll in a Medicare supplement, Medicare Advantage plan, or–if eligible–an employer-sponsored plan.

  • Coverage

While there are no limits on costs, there are limits regarding care. Medicare Part A has a limit of 190 lifetime days when utilizing inpatient mental health benefits. There is also a limit of 100 days for short-term care provided at a skilled nursing facility per benefit period.

Medicare Part A covers home health care services provided by skilled medical professionals. These services include physical therapy, speech therapy, and occupational therapy. It is important to understand that Medicare Part A does not cover care for the activities of daily living.

Finally, Medicare Part A covers all costs and services relating to hospice care when using a Medicare-approved provider. To be eligible for hospice care, an individual must be diagnosed with 6 months or less to live. Regardless of any primary or secondary benefits, hospice care and cost will always be coordinated through Medicare Part A.

In Summary

Discussing costs and benefits can become trivial, so here is some Medicare trivia. Who were the first two Medicare beneficiaries? President Harry Truman and his wife Bess.

Medicare has four parts, unique rules, and benefits that create a complex health insurance program.  Each month, I will continue to provide information on the various topics of Medicare. Next month I will cover Part B, the second part of Original Medicare.

John Norce is the President of Medicare Portal and a contributing columnist for Advisor Today.

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