Once you turn 65, you're eligible for Medicare. But before you sign up, it's important to understand just what the different parts of Medicare cover and how much they cost, so you don't end up wasting money on things you could be getting for free. Because Medicare Part A is the most basic part of Medicare, it's an excellent place to start.
Part A premiums
Medicare Part A is free for nearly everyone who qualifies for Social Security benefits. You'll get Part A at no charge if you or your spouse has at least 40 calendar quarters of paying Medicare taxes on your work record. That will almost certainly be the case if you've paid the 40 quarters of Social Security taxes needed to qualify for Social Security benefits.
If you don't have 40 quarters of Medicare taxes in your earnings record, you can still get Medicare Part A; you'll just have to pay premiums on it. For 2017, a retiree with 30 to 39 calendar quarters of Medicare taxes would pay $227 per month in Part A premiums; one with fewer than 30 quarters would pay $413 per month in premiums.
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Other Part A costs
If you get Part A premium-free, that doesn't mean you're out of the woods cost-wise. Original Medicare, which includes both Part A and Part B, has both deductibles and coinsurance charges.
A deductible is the amount you must pay in qualified healthcare expenses before your insurance coverage will kick in and start paying for these expenses. Different types of healthcare expenses can have different deductible requirements. For example, under Part A, hospital care has a deductible of $1,316 in 2017 for each "benefit period," which starts the day you're admitted to the hospital and ends when you haven't gotten any hospital care for 60 days in a row. That number will go up to $1,340 in 2018.
Coinsurance is the amount of the healthcare expense you're expected to pay once your insurance kicks in. It's usually listed as a percentage of the total expense, but is sometimes provided as a dollar amount instead. For example, Part A pays for the first 60 days of hospital care after you've fulfilled the deductible, but during days 61 to 90 of a hospital stay you'll have a $329 per day coinsurance in 2017 and $335 in 2018.
What Part A covers
Part A is primarily hospital coverage. It will pay for expenses related to inpatient hospital care, hospice care (in your home or in a hospice facility), and long-term care hospitals. Part A may also provide coverage of other long-term care expenses, but only under certain conditions.
By Medicare's definition, long-term care is not always a medical expense and thus may not be covered under Part A or any other part of the program. Part A only covers long-term care if you can show that it's "medically necessary," typically by getting a doctor's orders for such care.
For example, skilled nursing facilities (SNFs) -- aka nursing homes -- are one of the most expensive types of long-term care. Medicare Part A will only cover SNF expenses if all of the following requirements are met: you have a "qualifying hospital stay" of at least three days no more than 30 days before entering the SNF; your doctor has ordered daily skilled care in such a facility (note that rehabilitation care doesn't qualify); and you need this care because of a hospital-related medical condition. Even then, Part A will only cover the first 100 days of your stay in a skilled nursing facility -- and you'll have coinsurance fees to pay for days 21 through 100.
Using Part A
It's a good idea to identify nearby hospitals and other healthcare providers that accept Medicare before you actually need their services. You can use the search tools on Medicare.gov to find healthcare providers in your area; the tool also includes ratings (ranging from 1 to 5 stars) and other information about these providers. Any time that a doctor or hospital recommends services that might fall under Part A, check to make sure that those services are covered and that you can afford them before you actually get anything done -- except, of course, for critical situations when you can't wait for treatment.
You should also consider picking up a private long-term care insurance policy, since such care can get extremely expensive extremely quickly – especially considering that most long-term care isn't covered by any part of Medicare. Given that around 70% of Americans will need long-term care at some point, it just makes sense to prepare for these expenses. And if you've got both a long-term care insurance policy and Medicare covering your back, you should have a much easier time sleeping at night.
