Image source: Medicare.gov.
Medicare is an essential part of how retirees cover their healthcare costs, but many see the program as a confusing alphabet soup of different parts that don't always fit together in an easy-to-understand way. Below, you'll find a simple guide to understanding Medicare Part A coverage, including how much you'll pay for it and what kinds of expenses it covers.
What Medicare Part A costs
One of the best things about Medicare Part A coverage is that for most Americans, it's free. Unlike other parts of the Medicare program, anyone who paid enough in Medicare payroll taxes during their careers -- or who is married to someone who did so -- can get Medicare Part A without a premium. Those who had less than 40 quarters of coverage will pay either $226 per month for Part A if they worked 30 to 39 quarters or $411 per month if they had less than 30 quarters.
The biggest cost for Part A comes from deductibles and copayments. You'll pay the first $1,288 of your Part A expenses in 2016 as a deductible before coverage kicks in. As you'll see below, what Medicare pays depends on the particular service you need.
Coverage under Medicare Part A
Medicare Part A covers a variety of services. The most important is hospital coverage, with Medicare paying for a semi-private room along with any meals, general nursing services, prescription drugs and other treatment received during your hospital stay, and other related services. For Medicare to cover a stay, your doctor needs to confirm that you need at least two nights of care of a type only available in a hospital. You can also get skilled nursing care, and coverage for long-term care hospitals is also included in Part A as long as care is for a condition that's expected to get better in time.
Part A also pays for costs of a skilled nursing facility outside a hospital. To qualify, you need at least three days of inpatient hospital care tied to your skilled-nursing facility stay, and your doctor has to confirm that you need the facility's services. Custodial care of the sort that most nursing homes and other long-term care facilities provide typically aren't covered.
In addition, those who qualify for hospice care can have expenses covered to help stay in their homes. Services are intended for those with life expectancies of six months or less, and benefits run for two 90-day periods with requirements for doctors to recertify your terminal condition.
Finally, home healthcare is available in certain limited situations. You must be under the care of a doctor under a qualifying plan of care that requires intermittent skilled nursing care, physical therapy, speech-language pathology, or continued occupational therapy services. Your condition must be such that you're expected to improve or need services to maintain your current health status. These benefits typically involve a mix of Part A and Part B services.
Copayments under Medicare Part A
For hospital stays, Medicare covers the first 60 days of your visit. After that, you're responsible only for a daily copayment of $322 per day for the next 30 days of your visit. Beyond a total of 90 days, you have to use your lifetime reserve of hospital days. You get up to 60 over the course of your lifetime, and the copayment is $644 per day in 2016.
Skilled nursing costs are handled differently. Medicare pays for the first 20 days of your visit. After that, the next 80 days require a copayment of $161 per day. After a total of 100 days, Medicare provides no coverage for costs.
Even with Medicare Part A, the costs of hospital and skilled nursing care can be quite high. Nevertheless, given how much more expensive the total bill for such services is, you have to appreciate the benefits of Medicare Part A -- especially given that it comes at no extra charge for those who've paid into the Medicare system through payroll taxes over the course of their careers.
