The A, B, C, and D of Medicare, Chapter One

April 16, 2018                          About this Blog:  Click here

Chapter One:   Parts A  and  B 

Medicare Benefits = Money going out:

What things does Medicare pay for?  Medicare coverage benefits are in some ways similar — but in more ways different — from what you would be used to with other health insurance prior to getting on Medicare.

We’ll start by talking about the benefits in original Medicare, which is called Parts A and B.  The answers are very different for the SECOND kind of Medicare, which will talk about next week.

And, we won’t talk today about prescription drug coverage – that’s a whole separate, huge topic.

Here are the highlights of the Part A and Part B coverage:

Medicare Part A and Part B are called “original” Medicare because they were the only parts Medicare had when it was created in 1965.  In general, they cover basically all medically necessary care.  They won’t cover some things like cosmetic surgery or other beauty treatments.

With both Parts A and B, the federal government directly pays the doctors and hospitals most of the bill, roughly 80% of it.  Now let’s look at each of these two Parts:

Part A

This is mostly for in-patient, overnight hospital care, plus a few other things.

The way that Part A works for hospital care is that you pay a deductible of $1,340 for each time you stay in the hospital to treat a certain condition, and are admitted as an “in-patient.”   If you stay in the hospital twice in one year, for different problems, you’ll pay the $1,340 two times; and so forth.

After paying that big deductible, though, the full amount, or close to it, is typically paid by Medicare, in practically all cases.

Nursing Home:  If you recover in a nursing home after being a hospital in-patient for at least three days, then Part A will pay for that, too.   This lasts for 100 days (with co-pays after day 21), which is usually more than enough for a rehabilitation recovery from a major hospital treatment or surgery

Here are some more Part A benefits:

Home Health Care: Part A will pay for some home health care, ordered by your doctor.

End-Stage Renal Disease:   If a person’s kidneys are failing and they need to be on dialysis permanently or get a kidney transplant in order to live, then Medicare pays for that service.   However, this does not apply if the person does not have end-stage renal (kidney) disease.

Hospice Care:  If a person only has six months or less to live – according to the doctor, then Medicare Part A pays for the hospice care, which is comfort, managing symptoms, and pain control.  This is for situations where the doctor considers the personal terminal and is not going to get better.    Now, we’ll switch to Part B:

Part B: 

This is for doctor services and certain other things, as well as what are called hospital “out-patient” services.  That means when you go in and out of the hospital in the same day.

However, “out-patient” can also mean when you stay in a hospital bed overnight, IF they say you are in “Observation Status” and not “admitted.”  If that sounds illogical, that’s because it is.   Observation Status is a huge can of worms that we’ll discuss later on.

Some other things covered by Part B include drugs administered in a medical clinic, and also outpatient or home kidney dialysis

Part B has an annual deductible, like most insurance policies have.  That’s means that starting January 1 of each, the first certain portion of expense during the year is paid by you.  After that, the coverage kicks in.

For Medicare Part B, that annual deductible is $183.   I only pay a small $183 deductible each year, you say?  That’s great news!

But wait:  Here’s the bad news. There are also co-pays, like other insurance — except it can add up to quite a lot.    Most insurance has co-pays of a flat amount of money, say $30 co-pay when you see a medical specialist.

For Part B, however, the co-pays are NOT a flat dollar amount.  Instead, they’re a percentage of the bill.  In fact, they don’t even call them “co-pays.”  They call it co-insurance, to show that it’s different.

The percentage you pay is 20% of what Medicare decides is the proper price for the medical service you received.   In other words, if you have a doctor visit and Medicare says the correct price is $100, then Medicare pays your doctor $80 (80%) and you have to pay the doctor $20 (20%).

If you have a special procedure and the Medicare price (called the Medicare Rate) is $1,000, then Medicare pays $800, and you have to pay $200.

And so forth:  Have a big $100,000 surgery, and you pay 20%, which is $20,000.   Ouch, big time!

These are amounts that you would pay IF you had NO INSURANCE to supplement your Medicare.  A  supplement policy will pay the doctors and hospitals most of the amount that Medicare didn’t pay them.

A very important point is that there is NO UPPER LIMIT to what you could owe in a year for these 20% co-insurance amounts.    In contrast, most regular insurance has an upper limit, called an annual Out Of Pocket limit.  Not so for Medicare Parts A and B.

So, a person potentially could have many tens of thousands, or even hundreds of thousands, of dollars of bills that are not paid by Medicare.

That’s why most everyone buys some kind of insurance policy to help pay for these portions not paid by Medicare.   That’s a complicated subject, too.

As questions pop into your head, feel free to write them in a comment (Click at the top of this page).

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