Medicare celebrated its 50th anniversary in 2015, and the program helps tens of millions of Americans cover their healthcare expenses. In particular, Medicare Part A coverage offers help with the expensive cost of care in hospitals and other inpatient facilities. For the vast majority of participants, Medicare Part A coverage comes with no monthly premium. Instead, Part A requires you to pay deductibles and coinsurance amounts when you actually use hospital services.
The latest Medicare cost figures for 2016 just came out, and as you'd expect, costs are heading up next year. Let's take a closer look at exactly what Medicare Part A participants will pay next year.
What Medicare Part A covers
Medicare Part A covers many of the services you need on an inpatient basis. It covers semi-private rooms, meals, general nursing, drugs received as part of your inpatient treatment, and other hospital services. Coverage takes effect when a doctor officially orders that you need to stay overnight for at least two nights for medically necessary care that can be given only in a hospital. Skilled nursing care is also included, as are long-term care hospitals for serious medical conditions that are expected to improve over time, and allow the patient to return home.
For separate skilled nursing facilities, Medicare requires that you have a qualifying hospital stay of at least three days of inpatient care associated with your admission to the facility. In addition, your doctor needs to determine that you need daily skilled care by qualified staff.
What you'll pay for inpatient services under Medicare Part A
Medicare Part A charges an upfront deductible that participants must pay before inpatient hospital coverage kicks in. For 2016, that deductible is $1,288, which is up $28 from 2015.
At that point, Medicare pays all of the allowed costs of hospital care for the first 60 days of your stay. From the 61st to the 90th day of your hospital stay, Medicare still covers most of the cost, but you'll have to pay a daily coinsurance amount. That figure is $322 per day for 2016, up $7 from this year.
Beyond the 90th day of a hospital stay, you've used up all of your annual benefits under Medicare. However, Medicare entitles you to a lifetime reserve of up to 60 additional days of care. The coinsurance amount on these reserve days is double the figure for the 61st to 90th days, making the cost next year $644 per day, up $14 from 2015.
For skilled nursing facilities, the calculations are slightly different. Medicare covers all costs for the first 20 days of skilled nursing care, with no deductible because the required hospital stay related to the skilled nursing facility admission involved the hospital deductible. From the 21st to 100th day, you'll pay a coinsurance amount of $161 per day in 2016. That's up $3.50 from 2015. After the 100th day, you're responsible for all costs, and there's no provision for lifetime reserve days for skilled nursing facilities.
Hospital and skilled nursing facility charges can be astronomical, and Medicare pays the lion's share of costs for these expenses. Nevertheless, as you can see above, you'll still be responsible for paying a substantial amount of money for your medical care in an inpatient facility. Making sure you understand the risks involved can help you with the decision of whether to get additional insurance coverage in retirement, either through a Medigap supplemental policy or by using a Medicare Advantage plan to provide further benefits.