Nearly every American will someday rely on Medicare for help with healthcare. Designed primarily to cover those 65 or older, Medicare has several different parts. Traditional Medicare includes coverage for hospital and inpatient care, and is also known as Part A.
Every year, Medicare changes certain aspects of its healthcare program, including the amount it charges. Below, we'll look at what's in line for Medicare Part A in 2021.
What to expect from Medicare Part A
When you need to stay in a hospital or skilled nursing facility, that's when Medicare Part A coverage kicks in. Ordinarily, hospital stays that are medically necessary are covered, with Medicare paying for a semiprivate room and any medical treatment, services, tests, and prescription drugs. You'll also qualify to receive meals during your hospital stay.
The idea behind Medicare's hospital coverage is to get you healthy and allow you to return to your ordinary life. A hospital stay of at least two days is necessary to trigger Medicare coverage, but as you'll see below, the federal government will cover relatively long stays.
Nursing home costs aren't covered under Medicare Part A, but if you need skilled nursing care, then inpatient facility costs are eligible for coverage. Before you'll qualify, you'll usually need to have stayed at a hospital for at least three days. Again, the foundation of Medicare coverage here is to return you to a healthy life, and that's why long-term care that's not connected with an improving medical condition isn't included.
There are also some extraordinary services that are covered under Part A. Home hospice care is available to the terminally ill, as is medically necessary home-provided care for other conditions.
Costs of Medicare Part A
The good news is that most people get Medicare Part A without paying any monthly premium. The payroll taxes that are withheld from your paychecks throughout your career typically cover your program costs. As long as you paid into Medicare through payroll taxes for at least 10 years, or had a spouse who did so, then you probably won't have to pay for Part A.
But for those with shorter covered work histories, monthly premiums can apply. If you worked between 30 and 39 quarters, you'll pay $259 per month in 2021, up $7 from 2020. Those with fewer than 30 quarters of eligible work history have to pay $471 per month, higher by $13 from year-earlier levels.
Those who use their Medicare coverage to receive healthcare during the year will incur additional costs. You'll have to cover your 2021 deductible of $1,484 up front before Medicare starts to kick in. That's $76 higher than it was in 2020.
In addition, there are co-payments for many Part A services. After you pay the deductible, Medicare will cover the first 60 days of a hospital stay without additional charge. From days 61 to 90, you'll have to pay $371 per day, up $19 from 2020. After day 90, you have 60 "lifetime reserve days" for which you'll pay $742 per day in 2021, $38 higher than in 2020.
Stays in skilled nursing facilities have a similar cost structure. Co-payments are $0 for the first 20 days, and then $185.50 per day for days 21 through 100. That's up by $9.50 per day from the previous year. After day 100, Medicare doesn't provide any further coverage.
Understand your hospital coverage
Healthcare is one of the most expensive needs in retirement, so you'll want to take maximum advantage of Medicare Part A. By knowing what it will and won't cover, you'll be fully prepared for your golden years.