Millions of older Americans get health benefits through Medicare. And while there are premiums to pay in order to secure that coverage, most seniors get a break when it comes to Part A.
Medicare Part A covers hospital care, including longer-term stays and skilled nursing facilities. Most enrollees aren't charged a premium for Part A, whereas in 2024, the standard monthly premium for Part B, which covers outpatient services, is $174.70.
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Part D, which covers prescription drugs, also charges a premium. However, unlike Part B, there's no standard premium, as that cost can vary from one plan to the next.
Because Medicare Part A does not charge a premium, you may be inclined to believe that all of your coverage under it is free. But that's a big misconception that could upend your finances in a very significant way.
Don't get caught off guard
In a recent MedicareAdvantage.com survey, roughly 49% of current Medicare enrollees thought there was no deductible for inpatient hospital care. But you should know that there is a cost for receiving hospital care under Part A, and it's not a small one.
Medicare Part A charges a deductible each time you're admitted to the hospital. In 2024, you'll pay a deductible of $1,632 per stay, which is a $32 increase from 2023.
Do keep in mind that this deductible is not an annual one. Rather, it's the deductible you'll pay per hospital stay, which means it's conceivable that you could end up having to cover it more than once in a given year.
Now that $1,632 deductible will cover your first 60 days in the hospital. But if you have a stay that extends beyond that point, you'll be charged $408 a day through your 90th day. Beyond that, you'll have to dip into your lifetime reserve days for hospital care, and those will cost you a whopping $816 per day in 2024.
Know what costs you might be in for
Clearly, hospital coverage under Medicare Part A is by no means free -- even if you aren't being charged a premium. So it's important to plan for the expenses you might face.
One important way to do so is to sign up for a Medigap plan. Also known as supplemental insurance, Medigap might pick up some of the costs you're liable for under Medicare Part A, like the $408 daily coinsurance you'll be charged for days 61 through 90 of a hospital stay.
Another smart idea is to pad your retirement savings so you have cash reserves to dip into for healthcare expenses should you need to. If you have access to an HSA, you can also aim to boost that balance so you're able to take withdrawals in retirement when your expenses mount. HSA withdrawals are tax-free when used for qualifying medical bills.
It's easy to see why you might think that healthcare under Medicare Part A is completely free. But that free ride only applies to premiums, and there can be other costs involved. Read up on those so your finances aren't thrown for a loop.
