MEDICARE BASIS – A SIMPLE EXPLANATION
I do not know how much you know about Medicare. These are a few very basic principles. I leaned towards over-simplification because it is important to under the basics well. Then we can build on that basic knowledge. Trying to learn the whole subject at once is overwhelming and can create confusion.
The major disservice done to the American senior population is that Medicare is so complicated that people cannot understand it. They think they are covered when they are not. Then after they are hospitalized, they end up with a huge co-payments, often in excess of $20,000, $30,000 or $ 40,000 that Medicare does not cover it. This can be devasting to their retirement and assets.
It only takes one major accident or illness to eat up an entire life’s savings. You need to make sure your Medicare is designed to protect your assets. The first step is to understand how Medicare works.
Medicare is divided into four main parts. Not understanding the parts and features is what gets people in financial trouble.
Part A is generally called Hospitalization. It covers five separate items.
1) It covers hospitalization.
The first 60 days in the hospital is totally covered.
Between days 60 and 90, you have a $341 per day co-payment.
Between 91 and 150 days in the hospital, you have a $682 per day co-payment.
After 151 days you have no more coverage and are responsible for the total bill for those days.
There are other factors when you are in the hospital for over 90 days.
Also, this is not a yearly deduction but a deduction for each trip to the hospital.
This is why Hospital Indemnity insurance is very important. It is not very expensive.
2) Part A covers skilled nursing care. This is the time you need to recover after being in the hospital. You are expected to recover and go home after your time there.
THIS IS NOT THE SAME AS TIME IN A NURSING HOME.
3) It covers in-home care. For after your release from a hospital or skilled nursing facility, if you still need help.
4) Hospice care, care for the terminally ill during their final days.
THIS IS ALSO NOT THE SAME AS A NURSING HOME.
5) It also covers blood, literally blood for transfusions.
Nursing homes are not covered by Medicare part A.
Medicare part B covers your doctors, surgery, x-rays, tests, etc. This insurance costs $135.50 in 2019 per month. If a person has more income they may have to pay more. Medicare B covers 20% of these fees. If you have a surgery that costs $200,000. Medicare will pay $!60,000 and you are responsible for $40.00. This is why you need gap insurance. To fill in the gaps in insurance.
Part C is Medicare Advantage.
The government pays a private insurance companies to provide Medicare Parts A and B. They call this Medicare Advantage or Medicare Part C. They are required by law to offer at least the same level of coverage as Medicare Parts A and B. Many of the Medicare Advantage (Part C) providers add additional benefits like vision, dental and free gym memberships. Some of these plans do not charge the $135.50 per month. People like these “free plans”, but insurance companies are businesses and businesses have to make money somehow. To make up for not charging the monthly charge they charge co-payments. These can add up to thousands of dollars each year.
Plan D is prescription drugs.
There are other fees that are not covered by these plans.
One example is the Excess Fee. Sometimes doctors want to be paid more than the government will permit Medicare to pay. The doctor can bill you an Excess Fee up to 15% percent of the amount the government is willing to pay. This may not seem like much for an office visit but for a specialist like a heart surgeon it can really add up.
If a person has surgery, these uncovered items can run up be twenty, thirty even forty thousand dollars PER EACH HOSPITAL STAY, PER EACH PERSON. This can add up and destroy your assets. One car wreck that involved a husband and wife could easily consume a whole investment property. That is why the gap insurance is important. It covers the things that part A and Part B do not cover.
Also, the deductions are not yearly deductibles but are for each benefit period. A benefit period starts the day you enter the hospital and end 60 days after you leave the hospital. Tom has a heart attack in January and is in the hospital for a week. He returns home in a weakened state but slowly recovers over the next few months. In March he loses his balance and falls. All the deductibles start over again.
I do not know what type of plan you have. I assume you have what is called Hospital Indemnity. That is important to have. Can you ask your agent if you have it? I am not trying to sell you anything, I am not allowed, I just want to make sure for what you are paying that you are covered for that.