Understanding the different parts of Medicare is essential to maximizing your benefits. Medicare Part A is the first part of Medicare and covers the most expensive aspects of your health care coverage.
What is Medicare Part A?
Medicare Part A is your hospital insurance for all your inpatient medical care services. You can think of this first part of Medicare as your room and board if you need intensive care in the future.
Understanding Your Medicare Benefits
Medicare is composed of four separate parts. All of which are voluntary but combine to provide comprehensive medical coverage.
- Part A – Hospital insurance
- Part B – Doctors’ insurance
- Part C (Medicare Advantage) – Private insurance policies that expand your Medicare benefits to include vision, dental, hearing, and prescription drug
- Part D – Prescription drug coverage
Medicare Part A and Part B are part of your Original Medicare benefits.
What Does Medicare Part A Cover?
- Inpatient medical care in a hospital
- Inpatient care in a nursing facility (not custodial or long-term care)
- Hospice care
- Inpatient care at senior treatment centers
- Home health care
- Skilled nursing facility care
What Part A Doesn’t Cover
Medicare Part A does not cover any outpatient medical services. All outpatient care services such as office visits, lab testing, preventative services, simple surgeries, ambulance rides, dialysis, chemotherapy, and other outpatient services are covered under Medicare Part B.
Inpatient vs. Outpatient
Inpatient care: admission into a hospital or treatment facility for more than 24 hours.
Outpatient care: receiving medical care without being admitted and stay for less than 24 hours.
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How Much Does Medicare Part A Cost?
Most Medicare beneficiaries receive their Part A benefits for free. As long as you have worked 40 quarters (10 years) in which you paid Medicare taxes, your Part A premiums are free.
Individuals with less than 40 working quarters will pay a monthly premium for their Original Medicare benefits proportional to the percentage they paid into Medicare. Only 1-2% of Medicare beneficiaries pay out of pocket for Part A premiums.
If purchased on the open market, Medicare Part A premiums would be $471 per month!
Out of Pocket Expenses
Though your Part A premiums are likely free, there are still out of pocket costs to be aware of.
The standard Medicare Part A deductible in 2021 is $1,484 for each benefit period, which means you may end up paying this deductible more than once.
The benefit period resets after 60 days out of the hospital. Therefore, you’ll pay the standard deductible each time you use your Part A benefits that are more than 60 days apart.
Your Part A benefits really only protect you fully for 60 days of inpatient medical care. After that, you’ll have an increasing daily coinsurance.
- Days 1-60: $0 coinsurance for each benefit period
- Days 61-90: $352 ($371 in 2021) coinsurance per day of each benefit period
- Days 91 and beyond: $704 ($742 in 2021) coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime)
- Beyond lifetime reserve days: all costs
Your Part A benefits include up to 20 days in a skilled nursing facility. After 20 days, you’ll pay a daily copay.
- Days 1-20: $0 for each benefit period.
- Days 21-100: $185.50 per day for each benefit period.
- Days 101 and beyond: all cost.
Extending Your Medicare Part A Benefits
While Medicare provides excellent health care coverage, it’s far from comprehensive. If you need extensive ongoing medical care, you’re Part A benefits only go so far. And as shown above, the out of pocket costs for your benefits be steep.
Fortunately, there are several options for you to customize and extend your Medicare benefits.
Medicare Supplemental Insurance (Medigap): These private health insurance plans fill the financial gaps looming within your Medicare benefits, e.g. deductible, coinsurance, and copays.
There are 10 Medigap plans; each plan covers a different set of financial gaps. Medigap extends your Part A benefits from 100 days to 365 days of inpatient care. If you don’t have a long-term care insurance policy, we strongly suggest exploring your Medigap options.
Medicare Advantage: Another option to extending your Medicare benefits is with a Medicare Advantage policy. These too are private insurance plans that not only fill the financial gaps within Medicare, but also extends your benefits to include vision, dental, hearing, and prescription drug coverage. These bundled plans are an all in one solution to your health care needs.
When To Enroll
Your Medicare Enrollment Period is a seven-month window beginning three months before your 65th birthday, includes your birthday month, and continues for the following three months. It’s important to enroll in Medicare Part A during your initial enrollment window to avoid paying the late enrollment penalty.
You enroll in Medicare Part A through the Medicare.gov website. Anyone who has begun taking Social Security benefits is automatically enrolled in Medicare.