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Seniors on Medicare Who Fall Ill With COVID-19 Could Face Catastrophic Bills

By Maurie Backman – Oct 11, 2020 at 6:18AM

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It's bad enough that Medicare enrollees have to fear for their health. Now, many are worried about how to pay for their coronavirus treatment.

We're seven months into the coronavirus pandemic, and it's clear that the problem isn't going away soon. While all Americans are vulnerable to the effects of COVID-19, seniors are, statistically speaking, more likely to suffer severe symptoms that require treatment or even hospitalization.

It's estimated that there have been more than 1 million COVID-19 cases among Medicare beneficiaries this year, and of those, more than 284,000 required hospitalization. From there, 49% of those stays lasted between one and seven days, while 5% lasted more than 30 days.

But it's not just the physical impact of COVID-19 that Medicare enrollees need to worry about; it's the financial burden as well. While Americans of all ages are entitled to no-cost COVID-19 testing, treatment for those who fall ill is another story. The costs there could be downright devastating for Medicare enrollees on a fixed income.

Older person in hospital bed.

Image source: Getty Images.

What are seniors paying for COVID-19 treatment?

The cost of treatment for COVID-19 among Medicare beneficiaries depends on the nature of the illness and the specific Medicare coverage at play. Some seniors who opt for original Medicare -- Parts A, B, and D -- also have supplemental insurance (Medigap) that can cover coinsurance and other potentially astronomical out-of-pocket expenses. Those who don't have this insurance but require hospitalization could be left to grapple with substantial bills.

Medicare enrollees admitted to the hospital due to COVID-19 (or any other reason) are generally subject to a $1,408 deductible. That deductible also covers the first 60 days of treatment, which thankfully has been enough for a large number of seniors diagnosed with COVID-19. But those who wind up needing longer hospital stays could face astronomical costs. Once a hospital stay under Medicare Part A exceeds the 60-day mark, beneficiaries are subject to a daily coinsurance payment of $352, up until the 90-day mark. From there, they're subject to a daily coinsurance payment of $704 that's taken from their allotment of lifetime reserve days.

Given that a large number of Medicare enrollees get most of their income from Social Security, which only pays the average recipient a little more than $1,500 a month, an extended hospital stay could be financially ruinous. Since broader systemic change seems unlikely, seniors must plan for healthcare emergencies ahead of time.

Seniors need dedicated healthcare savings

The COVID-19 crisis is a once-in-a-lifetime event that caught millions of Americans off guard, but any sort of medical emergency can arise at any time, and seniors in particular need funds to cover resulting expenses.

A health savings account, or HSA, can be a good solution. These accounts allow participants to contribute pre-tax funds that can be invested for added growth and carried forward into the future. Medicare enrollees with HSAs can use that money to pay for Medicare premiums, as well as deductibles and other out-of-pocket costs associated with hospital stays.

The COVID-19 outbreak also underscores the importance of getting supplemental insurance in conjunction with original Medicare, as that could make the cost of hospital care far less burdensome. Though Medigap won't pay for services that Medicare itself won't cover, like dental care, it can pick up the coinsurance tab -- which, for hospital care, can be exorbitant.

The COVID-19 outbreak is an extreme crisis no one could have prepared for. Still, seniors can take steps to save for their healthcare needs in advance. Those nearing retirement should secure funds specifically for healthcare purposes and choose the right Medicare coverage. No senior should have to worry about paying for hospital care while his or her health is in danger.

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