The 2 Minute Guide to Medicare Basics
The Medicare and You guide that the government puts out is 123 pages long. It is fairly well written, but you don’t need to read it all. This is the abbreviated version and will give you enough of the basics to be able to intelligently discuss Medicare.
A great effort was made to keep the language as free from insurance jargon as possible. We are presenting a 50,000-foot view. We will not be going into all of the nitty-gritty details. But do not hesitate to call us if you have a question.
Everything in Medicare has a letter. There are letters A through N for the supplements but do not confuse that with the very same letters that Medicare uses to describe the various parts of the Medicare program. In this guide we will be referring to either part A, B, C or D.
Medicare Part A is the hospital insurance or the in-patient coverage.
If you receive or are even eligible for Social Security, it is free. It covers a certain portion of the hospital bills depending on how many days you are hospitalized. It covers most of the procedures and costs associated with a hospital stay. I am not going to enumerate each item. That can be found in the “Medicare and You” guide put out by CMS. But again, most of the items except things like telephone service, television, private duty nursing and so forth, are covered.
Part A does have an annual deductible. That is the amount you must first pay before the plan starts paying. For the first 60 days of care there is no coinsurance. In other words, you only must cover the deductible. After 60 days and up until 90 days you will have to pay the $335 a day. This is based on 2018 information.
After 90 days you have 60 reserve lifetime days and you will pay $670 a day. I want to stress that once you dip into and use up these days, there are no more. When the reserve days are used up you are on the hook for the entire bill.
Hopefully you will purchase a supplement that picks these daily costs. Remember that even the most basic Medicare supplement will cover the Part A coinsurance. You do not have to spend a lot of money to have this very important coverage.
Another important feature of a supplement is to provide you will additional hospital days. This is going to require a bit of an explanation, but I will try to make it as simple as I can.
Medicare provides for a certain number of covered days per benefit period.
A benefit period starts when you are admitted and ends when you have been out of the hospital for more than 60 consecutive days. If you go back into the hospital after 60 days, you start a new benefit period. A moment ago, we told you that Medicare will cover the first 90 days before you need to dip into your lifetime reserve of 60 days.
If you are hospitalized for 50 days, go home for 20 days and get readmitted, any additional days are added to that same benefit period. If you hit 90 days you are dipping into the reserve.
I know this can be confusing and if you call us we would be glad to explain again. But here is the takeaway from all of this.
- If you buy a Medicare supplement, any supplement, you will be rewarded with an additional 365 reserve days on top of the 60 that Medicare gives you.
- It sounds like a lot of days, but certain illnesses can have you in an out of the hospital multiple times.
- With a supplement, in addition to the extra days, you will get the daily coinsurance costs paid for. It is the safety net you need to have.
It does not matter which supplement you buy; the least or the most expensive. They will all give you this coverage.
Part B is the outpatient insurance. It pays for your doctor bills, tests, etc. It has a deductible of $183 in 2018. You pay the first $183 of doctor or outpatient bills. After that, it covers 80%.
Part B is not free and how much you pay for it is tied to your income. The average premium is about $130 a month.
The good news here is that every supplement covers the 20% that Medicare does not cover.
MEDICARE SUPP BUYER’S TIP: If you delay in signing up for Medicare you could end up paying a penalty for Part B premiums. Get professional advice to avoid paying extra. Especially if you have an employer’s medical plan or retirement coverage from your job. Call us at 561-327-6899 and we will help you out.
We will not get into Part D right now since that is a separate supplement that covers prescriptions. Part C is called Medicare Advantage and that is a separate topic.
What is Missing from Medicare?
What most people fail to realize is that Medicare, even with an inexpensive supplement, is better health insurance than most people currently have. While it is not perfect, I don’t think I have ever heard anyone wish they were back on their company’s plan.
Unfortunately, there are plenty of things that Medicare does not pay for.
To begin with, without a supplement you still have considerable financial exposure for the:
- Part A deductible
- Part A coinsurance
- Lack of reserve hospital days beyond the 60 lifetime days that Medicare gives you
- 20% of non-covered Part B expenses
But that is not all. Even a supplement will not provide financial protection against:
- Extended home healthcare expenses
- Long term care facility expenses
- Dental work
The cost to buy insurance to cover these expenses can be high. This is especially true of home healthcare and long term care insurance which has become very expensive and should be bought well in advance of your Medicare years.
Nevertheless, there are still some creative solutions and financial products that will help you sleep at night. We will cover them in a separate article. But do not hesitate to contact us for more information.