Medicare Part A: Comprehensive Guide (2021)

Part A (Hospital Insurance) is a critical part of Medicare coverage, here are the facts you need to know.
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    What is Medicare Part A?

    Medicare is the federal health insurance program designed for people age 65 and older or for people under the age of 65 with certain illnesses or disabilities.

    Medicare Part A is Hospital Insurance and is a core part of Medicare that covers inpatient hospital costs and related services.  When combined with Medicare Part B (Medical Insurance), the two are commonly referred to together as ‘Original Medicare’.

    Am I eligible for Medicare Part A?

    You are eligible for Part A, if you are 65 or older and a U.S. citizen; or a permanent resident that has been in the U.S. continuously for 5 years.

    You are eligible to receive Part A coverage premium-free, if you or your spouse has worked and paid Medicare taxes for a minimum of 10 years (40 quarters)

    If you or your spouse have not paid taxes long enough you can still enroll in Medicare Part A.  For 2021, you will need to pay a monthly premium of up to $471 per month ($458 per month in 2020).

    If you are not 65 years or older you can still be eligible for a premium-free Part A if you have received Social Security Disability Income for at least 24 months.  You are also eligible if you have End-Stage Renal Disease (‘ESRD’)(permanent kidney failure) or Amyotrophic Lateral Sclerosis (ALS), also known as Lou Gehrig’s disease.

    What is covered by Medicare Part A?

    Medicare Part A is a Hospital Insurance and covers inpatient hospital stays, short-term skilled nursing facilities, hospice care and home health care.

    Inpatient Hospital Care

    Inpatient hospital care includes hospital services upon being admitted into a hospital by a doctor.  Services covered include surgeries, semi-private rooms, meals, nursing and any drugs used as part of your inpatient care.  Inpatient hospital care includes care you receive in acute care hospitals, critical access hospitals, inpatient rehabilitation facilities, inpatient psychiatric facilities and long-term care hospitals.

    Part A will cover up to 60 days after you pay the Part A deductible of $1,484.  Additional coverage will require you to pay coinsurance costs for days 61-90 and up to 100% of the cost beyond 90 days (more on this below).

    Skilled Nursing Facilities

    Part A will pay for short-term care received at Skilled Nursing Facilities (SNF) care after a ‘qualifying hospital stay’ which is defined as a hospital stay of 3 days or more.  Your doctor must determine that you need daily skilled care.

    Skilled care is nursing and therapy care that can only be safely and effectively performed by, or under the supervision of professionals or technical personnel.  The care must be delivered by, or under the supervision of skilled nursing or therapy staff that come from an SNF certified by Medicare.  Medicare will help cover up to the first 100 days of care in an SNF after a ‘qualifying hospital stay’.

    Hospice Care

    Hospice care is needed when a patient has become terminally ill. In the event a doctor has determined a patient has a life expectancy of fewer than 6 months, Part A will cover all the services required as part of hospice care if you accept palliative care (for comfort) instead of care to cure your illness and sign a statement stating this.  Services include doctors, nurses, aides, medical equipment, drugs for symptom control or pain relief, occupational therapy, physical therapy and counseling for both the patient and their family.

    Home Health Care

    Home Health Care services are typically covered under Part B; however, Part A will cover costs in circumstances where you have had at least 3 days of prior hospitalization or a Medicare-covered SNF stay.  You must meet home health care eligibility requirements, such as being certified by a doctor that you are homebound and require intermittent skilled nursing care.

    What is NOT covered by Medicare Part A?

    Many people get confused about what’s included in Part A and what is not.  Here are the 3 most common misconceptions of what is covered:

    Outpatient Hospital Services

    Services like regular doctor visits, doctor-ordered X-rays and lab results will not be covered by Part A, but instead will be included in Part B.  This includes emergency room services as well as overnight observations where you are not ‘officially admitted’ by a doctor as an inpatient.

    Long-Term Care / Custodial Care

    While Part A will cover short-term care at nursing facilities following a ‘qualifying hospital stay’ of 3 days or more.  Long-term care at nursing facilities and homes is not be covered by Part A.  This includes custodial care like support with eating, getting dressed and bathing.

    Dental, Vision and other Non-Trauma / Accidental Injury-Related Care

    Medicare also does not cover dental care, eye exams for prescription glasses, dentures, cosmetic surgery, acupuncture, hearing aids or other elective or non-trauma / accident-related procedures.

    Do I need to enroll in Medicare Part A?

    If you are eligible for premium-free Part A coverage it is recommended that you enroll in Part A regardless if you are currently receiving insurance through your employer or your spouse’s employer.  This is because Medicare can potentially reduce overall costs of hospital stays when paired with employer coverage (plus it’s free!).

    If you are NOT eligible for premium-free Part A, you may be penalized for late enrollment and you should only consider deferring enrollment if you are receiving coverage from your (or your spouse’s) employer and that employer has greater than 20 employees:

    • If the employer has greater than 20 employees you may defer enrollment into Part A without any penalties as long as you enroll within 8 months of losing your (or your spouse’s) employer coverage or ceasing to work, whichever comes first.
    • If the employer has less than 20 employees you are not eligible for deferral without penalties and should enroll in Medicare as soon as you are eligible in order to avoid Late Enrollment Penalties.

    Part A: Late Enrollment Penalties

    If you do not qualify for premium-free Part A and do not purchase Part A coverage when you are first eligible for Medicare, your monthly premium may go up by 10% when you subsequently decide to enroll. 

    You will have to pay the higher premium for twice (2x) the number of years you didn’t sign up for Part A when you could have.  For example, if did not qualify for premium-free Part A and you were eligible for 2 years but didn’t sign up, you’ll have to pay the higher premium for 4 years.

    How much is Medicare Part A?

    Outlined below are the costs of Medicare Part A under Original Medicare.  If you choose to receive or supplement your Medicare coverage through private health insurance plans such as Medicare Advantage (also known as ‘Part C’ coverage and is an ‘all-in-one’ bundled alternative to Original Medicare) or Medicare Supplement plan (also known as ‘Medigap’) the costs may vary or change in accordance with the policy’s stated benefits.

    Part A: Premiums

    For most people, Medicare Part A coverage is premium-free if you have paid taxes for 10 years (40 quarters).

    In 2021, if you are buying Part A there will be a premium of up to $471 a month.  However, if you have been paying Medicare taxes for 30-39 quarters the standard premium is slightly lower at $259 per month.

    Paid taxes for: Less than 30 quarters 30-39 quarters 40 quarters +
    2021 Monthly Premium: $471
    a month
    $259
    a month
    Free

    Part A: Out-of-Pocket Costs (Deductibles, Copays and Coinsurance)

    Even if you are eligible for premium-free Part A, you will still have to pay for out-of-pocket costs and you should be aware of what you need to pay if you are ever hospitalized.

    Inpatient Hospital Stay Costs

    For hospital stays you will be responsible for a $1,484 deductible that needs to be paid for each Benefit Period.

    Definition: Benefit Period

    A benefit period begins the day you are admitted to a hospital as an inpatient and ends the day you are discharged from the hospital (or skilled nursing facility) for 60 consecutive days.

    If you go into a hospital or a skilled nursing facility after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There’s no limit to the number of benefit periods a year.

    Once you have paid the deductible Part A will cover your hospital stay for the first 60 days of each Benefit Period.  Between 60-90 days you will have a coinsurance cost per day of $371.  Once the 90 days have been exceeded the coinsurance is then raised to $742 if you have ‘lifetime reserve days’.

    ‘Lifetime reserve days’ are days that Part A will help pay for when the beneficiary is in the hospital beyond 90 days each Benefit Period.  You are allocated 60 days of lifetime reserve days and these days do not renew.  If you have used all your lifetime reserve days you will be obligated to pay 100% of the cost after 90 days of hospital stay.

    2021 Medicare Part A Out-of-Pocket Costs

    Skilled Nursing Facilities (SNF) Costs

    As mentioned earlier in this article, Part A covers care delivered by SNFs on a short-term basis after at least 3 days of hospitalization and if a doctor has decided that you need daily skilled care.  Your obligations under Part A for SNF include:

      • Days 1–20: $0 for each Benefit Period
      • Days 21–100: $185.50 coinsurance per day of each Benefit Period
      • Days 101 and beyond: 100% of the costs
    COVID-19 UPDATE
    • If you’re not able to be in your home during the COVID-19 pandemic or are otherwise affected by the pandemic, you can get SNF care without a prior 3-day hospitalization
    • Some people may be eligible to get renewed SNF coverage without first having to start a new Benefit Period

    Hospice Care Costs

    Once you have decided to accept hospice care instead of care for your terminal illness, Part A will cover all your costs for hospice care services.  However, you may be required to pay a copayment of no more than $5 for each prescription drug or similar products for pain relief and symptom control while you’re at home.  You may also need to pay 5% of the Medicare-approved amount for inpatient respite care (which allows for your primary caretaker to take a rest from providing care to you).

    Home Health Care Costs

    Generally, through a combination of Part A and B coverage, approved home health care services are free of charge to you.  However, before you start getting your home health care, the home health agency should tell what Medicare will pay and any items or services they give you that aren’t covered by Medicare (because it may be deemed medically unnecessary).  The home health agency should give you a notice called the Advance Beneficiary Notice” (ABN) before giving you services and supplies that Medicare doesn’t cover.

    Final Words

    In summary, Medicare Part A is a critical part of Medicare coverage and covers medically necessary inpatient hospital services.  Most people are able to receive Part A premium-free when they turn 65 if they have paid Medicare taxes during their working career.  Although you may receive Part A coverage premium-free, you will still have deductible, copay and coinsurance obligations.