Editor’s Note: Journalist Philip Moeller, who writes widely on health and retirement, is here to provide the Medicare answers you need in “Ask Phil, the Medicare Maven.” Send your questions to Phil.
Moeller is a research fellow at the Center on Aging & Work at Boston College and co-
author of “How to Live to 100.” He wrote his latest book, “How to Get What’s Yours: The Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. He is now working on a companion book about Medicare. Follow him on Twitter @PhilMoeller or e-mail him at firstname.lastname@example.org.
I want to give Medicare Part A some time in the sun. The other parts of the Medicare family—B, C and D—get more attention, but Part A is hardly a wallflower. Perhaps most importantly, it can be used at no charge to help folks with group health insurance to defray some of their health care bills. Thanks to Casey Schwarz of the Medicare Rights Center and Lina Walker at AARP for tutoring sessions on (and I can’t help myself here) the ABCs of Part A.
Part A is also known as the “free” Medicare benefit. That’s because there are no premiums for people who also are eligible to collect Social Security benefits. This threshold is 40 quarters of work in jobs “covered” by Social Security, which means jobs where the person has to pay payroll taxes to Social Security. If you don’t have sufficient covered quarters of work, however, the Part A premium is really stiff—up to $407 a month this year. However, if a spouse does not qualify for free Part A on their own earnings record, they usually can still get free Part A if their spouse has the required quarters of covered work—call it a Medicare spousal benefit!
Part A covers stays in hospitals, medically necessary care (not what’s called custodial care) in skilled nursing facilities, hospice and even home health care. There is a $1,260 deductible for each distinct benefit period in a hospital. You can have multiple benefit periods in a year, but each must be separated by at least 60 days without in-patient care. After 60 continuous days in a hospital or 20 in a skilled nursing facility, steep coinsurance fees kick in.
GOT MEDICARE QUESTIONS?
There can be a tricky set of decisions about whether or not to sign up for Medicare if you turn 65 but still have employer group health insurance. People who work for employers with 20 or fewer employees generally have to sign up for Medicare, because the rules say that Medicare becomes the primary payer of covered health insurance expenses for Medicare-eligible employees in such plans. In larger plans, the employer plan remains the primary player, and Medicare becomes the secondary payer if you have it.
For people who do not need to pay Part A premiums, signing up for this coverage is usually a good idea. The exception is when the employee is in a high-deductible health plan that includes a health savings account that is funded with pre-tax dollars. These plans are not open to anyone taking Medicare, including Part A. In fact, in a bit of regulatory fortune telling that has always amazed me, you are supposed to stop contributing to your HSA six months before you begin Medicare. Anyway, if you have an HSA, you need to consider if Part A is for you. (Note: claiming Social Security benefits also includes mandatory enrollment in Part A, regardless of whether you have continuing employer group coverage or not.)
If you’re in a group health plan with a larger employer, you generally do not need to sign up for Medicare when you turn 65, although you should talk with your human resources department and, to be extra sage, give Social Security a call as well (it handles Medicare enrollments).
The big gotcha here, which many people don’t have a clue about, is that your employer plan’s prescription drug coverage must be at least as good as what you could get from a Medicare Part D prescription drug plan. If it’s not, you could be required to enroll in a Part D plan or face steep premium surcharges when you finally do enroll in a Part D plan after your group health plan coverage ends. Realistically, if your drug coverage was this bad, you might well be better off dropping out of your employer plan and moving totally onto Medicare.
If you do sign up for Part A, and it is the secondary payer, it can help you with some of the hospital expenses your private insurer does not cover. You still need to pay your Part A deductible for each applicable benefit period, and Part A will only help you with expenses that do not exceed Medicare-approved limits for covered provider procedures.
For example, if a hospital charged you $1,000 for a procedure and you had a 20 percent co-pay, Part A could pay the $200 difference (assuming you had already paid the $1,260 deductible). But if the Medicare-approved limit for this procedure was only $900, than Part A would pay you only $100 and you’d be on the hook for another $100. As with nearly everything about Medicare, you need to do your homework here, and if you are dealing with an elective procedure, you should do it before you go into the hospital or other covered care facility.
However, with hospital expenses quickly soaring into enormous sums after even a short stay, the odds are that Part A can really come in handy as the secondary payer should you encounter a health issue that requires hospitalization.