With over 70% of seniors in the United States participating, original Medicare remains the top healthcare program in the country. Because seniors can choose any doctor that takes Medicare without having to consider networks or referrals, Original Medicare offers seniors more freedom of choice than any alternative Advantage program.
In addition, because virtually every medically necessary medical procedure is covered by either Medicare Part A or Medicare Part B, seniors using Original Medicare do not have to worry about their insurance program denying coverage. As long as you and your doctor believe it is necessary, the odds are your Original Medicare will cover it. In this article, we answer the question; what is Medicare Part A?
Original Medicare has three basic parts; Part A, Part B and Part D. In general, Part A covers inpatient hospital care, Part B covers outpatient care and Part D covers prescription drugs. This article focuses on Medicare Part A which seems the simplest, but is in fact the most misunderstood part of Original Medicare.
Medicare Part A covers:
- inpatient hospital care,
- skilled nursing,
- nursing home care,
- hospice and home health services.
Most insurance agents simply explain that Medicare Part A is your inpatient hospital coverage and Medicare Part B is outpatient coverage. While that is technically true, it ignores the potential pitfalls and surprises are in the details of the plans. Part A operates very differently that Part B. It’s in these details that Part A is misunderstood and can lead to surprises and significant unexpected health costs for the Medicare beneficiary.
Medicare Part A offers health insurance coverage in time units called “Benefit Periods”. A benefit period begins the day you are admitted as an inpatient in a hospital. The benefit period ends when you have not been an inpatient in either a hospital or skilled nursing facility for 60 consecutive days. You can have an unlimited number of benefits periods. Note: your skilled nursing benefits only take effect after you have a qualifying hospital stay (i.e. an admitted inpatient for 3-days)
Your Part A hospital coverage after you pay the deductible is:
- 1-60 days 100%
- 61-90 days patient pays $315 / day co-pay up to $9,450
- 91-150 days patient pays $630 / day co-pay up to $37,800
- 151 days or more not covered
Each benefit period starts with a deductible. As of 2015, the Part A deductible is $1,260. After the deductible, Part A coverage begins. If you are admitted into a hospital as an inpatient your coverage includes 100% of a semi-private room, meals, general nursing care, drugs that are part of your inpatient treatment, and other hospital supplies and services for 60 full days.
Now, 60-full days of 100% inpatient coverage is a lot of coverage. The average hospital stay for a person on Medicare is just 5.20-days. Long hospital stays become more common over the age of 80, but account for just 6% of hospital stays for Medicare beneficiaries according to studies done by AARP. However, if you think you can go into a hospital, pay your deductible and have no other healthcare related bills, you have missed the one thing that was missing when we listed the hospital services Part A covers. Go back to the previous paragraph and re-read that list………Not what’s missing? That’s right, it says nothing about your doctor fees.
Unless the doctor is an employee of the hospital, the doctor fees will be billed under Medicare Part B. In that case, you are responsible for a 20% co-pay. Now, there can be a lot of confusion over who is or who is not an employee of the hospital. One of the easiest ways to break it down is this: if you are billed for services directly from the hospital, it should be covered under Part A. If you receive a separate bill from your doctor, anesthesiologist or any other medical professionals, they will be covered under Part B and you will be responsible for the co-pay unless you have Medigap insurance.
You are in a car accident and have internal injuries. As part of the treatment you must have surgery to remove your spleen. You are admitted to the hospital on September 01 and are discharged after five days. Your benefit period lasts for 60-days from the day you were admitted into the hospital. If you end up back into the hospital or a skilled nursing facility before those 60-days have passed, it is part of the same benefit period and no new deductible is required.
Skilled Nursing Facility Benefit (SNF)
- Days 1-20 in a SNF: 100% coverage
- Days 21-100 in a SNF: you pay a daily co-pay of $157.50
- Days 101 and on: Medicare Part A provides no coverage
- If your break in skilled care lasts more than 30 days, you need a new 3-day hospital stay to qualify for additional SNF care. The new hospital stay doesn’t need to be related to your previous stay.
- If your break in skilled care lasts for at least 60 consecutive days, this ends your current benefit period and renews your SNF benefits if you have a new qualifying hospital stay. This means that the maximum coverage available would again be up to 100 days of SNF benefits. Medicare does not offer Long Term Care.
More and more Medicare beneficiaries are spending time in a hospital under “observation status”. Observation status IS NOT an official admittance into a hospital and does not trigger Part A benefits. Do not assume that just because you are spending the night (or two) in a hospital bed that you are an inpatient. No one is required to tell you if you are there for observation or as an inpatient. You must ask your doctor or the hospital staff to clarify your status. If you are “under observation” Medicare Part B covers 80% of you hospital stay and you will not qualify for coverage in a Skilled Nursing Facility.
Can I Advise My Doctor To Make Me An Inpatient For Insurance Purposes?
The Center for Medicare and Medicaid Services (CMS) defines the rules that determine whether hospital patients can be reimbursed by Medicare as an inpatient or as an outpatient. CMS regulations determine what makes an inpatient hospital stay “medically necessary.” Your doctor has very limited leeway and must follow CMS regulations. For a hospital to claim you as an inpatient under Part A, the following requirements must first be met:
- The physician or qualified health professional must order your hospital admission in writing from the beginning. This is also called the signed “Physician Order and Certification,” which must be included in your medical record.
- There is a “two midnight” standard, which means that your stay must overlap at least two midnight’s.
- The hospital must provide justification for your admission within your medical case file, which can be in the form of admission and progress notes as well as other relevant documentation.
You can be kept under observation status and then be officially admitted into the hospital. However, you must be admitted officially for 3 days “two-midnights” before you can receive your SNF benefits.
What Is Medicare Part A — Summarized
Medicare Part A is your inpatient hospital insurance. Its coverage is extensive, but not unlimited. It is not a long-term care policy and no part of Medicare insurance will replace or be considered long-term care.
Rather than function on an annual basis, the Part A deductible and coverage is defined by benefit periods that start when you are first admitted as an inpatient into a hospital and end once you have completed 60 consecutive days of no health services.
When you are staying in a hospital you will want to confirm if you status is “under observation” or full admitted as an inpatient. If you are under observation, your health benefits will all fall under Medicare Part B coverage and you (or your Medicare Supplement Plan) will be responsible for 20%. If you are an inpatient, then all but doctor fees will likely be covered under Part A. Remember; if the service will be billed from your hospital it will be covered under Part A. Separate billing is indicative of a service more likely covered under Part B.
Lastly, your Skilled Nursing Facility benefits are predicated on your first being a hospital inpatient staying for two or more consecutive midnight’s in the hospital after being officially admitted. It is becoming too common for seniors to be discharged from a hospital directly to a SNF and surprised when they get a bill for SNF services. Only then do they realize that they were in the hospital under observation and Medicare will not cover their bills. By understanding your benefits, you will reduce unwanted surprises and better prepare for the possibilities that concern you.
For seniors concerned about what Medicare does not cover, either Long Term Care (LTC) insurance or Hospital Indemnity insurance are worth considering. For details on the benefits and costs of such coverage, please contact us.
Check out the Video: Medicare Parts A & B Explained
Matthew Claassen, CMT - Independent Insurance Broker
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Medigap Seminars Insurance Agency
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