Medicare is a critical part of just about every older American's financial plan. Most people become eligible for Medicare at 65, but what many people don't realize is that there are different parts of the Medicare program that govern certain types of coverage. Those who opt for traditional Medicare coverage typically use parts A and B, while those who prefer an alternative often go with a Medicare Advantage plan through a private insurance company. Part D prescription drug coverage is also available with either traditional Medicare or Medicare Advantage.
Other articles can take you through Medicare Part B and Part D as well as Medicare Advantage. Here, we'll focus on Medicare Part A, along with what changes will affect what you pay in connection with Part A coverage in 2020.
What does Medicare Part A cover?
Medicare Part A is designed to help cover medical costs related to a stay in a hospital or a skilled nursing facility. You can typically expect for Medicare coverage to include a semi-private room and meals during the stay, in addition to any medical treatment, services, tests, and prescription drugs you need. The key to hospital coverage is that it's geared toward getting you healthy again and able to return to a normal, self-sufficient life. Doctors have to treat you for two days or more for Medicare to apply, but once that threshold gets met, long-term stays are covered up to fairly generous maximums.
In addition to hospitals, stays in skilled nursing facilities are also often covered under Medicare Part A. The general requirement is that you need to have had at least three days of inpatient hospital care as part of the event that now has you requiring skilled nursing services. Here, the idea of helping you improve your medical condition is critical, because Part A doesn't cover regular nursing homes and long-term care needs in which there's no expectation of a return to a healthier and more medically self-sufficient life.
Finally, there's some Part A coverage that applies outside healthcare facilities. For instance, if you have a medical condition that leaves you with six months or less to live, then home hospice care is generally covered if your doctor provides the necessary certifications. There are some other situations in which medically necessary home-provided care will be available under Medicare.
How much does coverage under Medicare Part A cost?
It's unusual for people to pay monthly premiums for Medicare Part A, because payroll taxes typically cover the cost. However, if both you and your spouse failed to work for at least 10 years at a job for which you paid Medicare payroll taxes, then you might have to pay for your Part A coverage.
What you'll pay depends on how long you or your spouse worked. A work history of 30 to 39 quarters gets you monthly premiums of $252 per month in 2020, up by $12 from 2019's level. Those with less than 30 quarters of eligible work history have to pay $458 per month, up $21 from year-earlier levels.
What will I pay for medical services under Part A?
If you use your Medicare coverage, you'll also be responsible for paying your deductible each year under Part A, as well as any copayments on covered services. For 2020, you have to pay the first $1,408 of your Part A expenses before you cover the deductible before Medicare starts making payments on your behalf.
Even once coverage kicks in, you'll typically need to pay copayments in some cases. You'll typically get the first 60 days of a hospital stay at no cost, but each day from 61 to 90 will cost you $352 per day. After the 90th day, you'll be using the 60 lifetime reserve days you have, and each day will cost you $704.
For skilled nursing facility stays, the rules are a little different. There's no copayment for 20 days, but for days 21 through 100, you'll pay $176 per day. After day 100, you're responsible for all your costs.
A vital part of your healthcare plan
To protect yourself against the costs of healthcare in retirement, Medicare Part A plays an important role. Yet it doesn't cover all your costs, and so understanding your coverage will help you plan better for retirement and make sure you have enough savings to pay the portion of your healthcare costs that you'll remain responsible to pay.