Medicare was initially established for the purpose of paying certain health care costs for those who are age 65 and over, as well as for other select individuals who qualify based on specific disabilities. The program is estimated to cover roughly 50 million Americans, with more than 40 million of those being seniors. Enrollees have really enjoyed their coverage through Medicare because of the premiums and the basic coverage, but be aware of some confusion with Original Medicare parts A and B.
The Medicare program doesn’t provide care directly, but rather it either pays health care providers for their services or it reimburses patients for the bills that they have paid. This means that there are some hospitals and doctors that don’t accept Medicare payments. While it’s rare that this would happen, make sure your service provider will accept reimbursement from the government program. The key components of Medicare include:
- Part A – Hospitalization Coverage
- Part B – Doctors’ Services Coverage
- Part C – Medicare Advantage
- Part D – Prescription Drug Coverage
Medicare typically provides Part A coverage, while Part B is optional. Parts A and B are considered to be “Original Medicare.” In Original Medicare, enrollees are allowed to choose their own doctors and other health care providers without the need to obtain a referral or use providers who are located within a network. For many services, Medicare enrollees will pay a deductible or copayment before Medicare pays its share of the cost.
Medicare Part A provides for basic expenses and can save enrollees thousands of dollars that they would be responsible for paying out-of-pocket otherwise. Part A covers:
- Hospice costs
- Home health services
- Skilled nursing facility care expenses
- Nursing home care (custodial care is excluded if it’s the only type of care needed)
- Hospital care
This is only a basic list of what Part A covers for enrollees. There are specific expenses and exclusions inside of each of these categories. If you have any questions about expenses, treatments, or services that are covered under Medicare, you can visit the official Medicare website.
How Much Does Medicare Part A Cost?
The participants who are enrolled in Medicare Part A are not typically required to pay a monthly premium if either they or their spouse have paid Medicare taxes into the system during their working years. This is what is referred to as “premium free Medicare Part A.”
Most people are eligible to receive Medicare Part A premium free. These individuals typically include those who are age 65 and:
- Are already receiving either Social Security retirement benefits or Railroad Retirement benefits but have not yet filed for them, or
- Are eligible but have not yet filed for Social Security retirement or Railroad Retirement benefits, or
- They or their spouse had government covered employment.
In some cases, people who are under age 65 can also receive Medicare Part A premium free as well. These individuals include those who:
- Have received either Social Security or Railroad Retirement Board disability benefits for 24 months, or
- Have end stage renal disease and also meet other certain requirements.
If, however, a person is not eligible for premium free Medicare Part A, they may be able to purchase Part A provided that they meet one of the following conditions:
- They are age 65 or over, they are entitled to or are enrolling in Medicare Part B, and they meet the U.S. citizenship or residency requirements, or
- They are under the age of 65, they are disabled, and their premium free Medicare Part A coverage has ended because they have returned to work.
Should a person choose to purchase Part A, they must also have Part B and they must be paying monthly premiums for both Medicare parts. In 2016, the monthly premium for Medicare Part A can be up to $426. In cases where an individual has a limited amount of income, it may be possible to receive state assistance in paying for Medicare Part A and / or Medicare Part B premiums.
Enrollees do have the ability to decline Part A coverage if they want, but because in just about every case it’s free, there is little reason that anyone would opt-out. Additionally, opting out of Part A could lead to penalties. If you leave Part A, you won’t be eligible to receive Social Security benefits. If you’ve already received Social Security benefits and then you decide to opt-out of Part A, you will be responsible for paying back the money that you’ve received, which can become a tricky ordeal. There are only a few rare cases that anyone should want to Part A. One of those is if you’re enrolled in a group HAS plan and you want to continue to contributing to your plan.
If you want to leave Medicare A, we strongly advise that you talk to a Medicare expert or professional before doing so. Making the wrong decision could have drastic consequences like paying back Social Security, or not having the health care coverage that you need. Not having enough coverage could expose yourself to paying thousands of dollars in medical bills. Expensive hospital bills can put a serious dent in your retirement savings accounts. Don’t let health care costs ruin your retirement dream.
If you do decide to opt-out of the program, leaving Part A is simple. You fill out a CMS form 1763 and then mail that to your Social Security Administration Office. It’s as easy as that.
As you can see, Medicare can be a confusing program with different rules, regulations, and exemptions. Want to know more about Parts A or B, Medicare supplemental insurance plans, such as Medigap Plan F, or your health care insurance in general? We will help you. It’s vital to find the extra protection for your medicare. Nobody should have to sacrifice their health because they can’t afford the hospital bills.