Does this sound familiar?
“My best friend just went into the hospital for the third time this year. Each time she had to pay a Medicare deductible of over $1,400. That’s about $4,000 out of her pocket so far! I thought you only paid that deductible once per year. Could the same thing happen to me?”
“My mother-in-law had a short hospital stay, after which they sent her to a rehabilitation facility to recover. We were told that Medicare would pay for the rehab. Now the rehab place wants her to pay over $176 per day, starting as soon as her 21st day there. That’s a lot of money for us to pay! What happened?”
It Pays to Know the Rules About Benefit Periods
After working for 10 years with people on Medicare, I believe these two scenarios happen in my community every day. People get surprised by Medicare deductibles and copayments they never expected. To help you avoid surprises like that, you’ll want critical knowledge about three things:
- What is a Medicare benefit period?
- How does the Medicare benefit period affect the amount you pay out-of-pocket?
- How can you avoid the Medicare benefit period expense?
What Exactly Is a Medicare Benefit Period?
Medicare defines a benefit period as:
- A hospital stay of any length,
- Plus any time you spend recovering in an inpatient rehabilitation facility,
- Plus the 60 consecutive days immediately following your release.
Benefit Periods Can Be Longer or Shorter Than Illnesses: The term “benefit period” only determines how you get billed. It does not mean the length of an illness or the length of time you are treated for a condition. That’s important to know.
The Specific Length of Medicare Benefit Periods:
Benefit Period Start: A Medicare benefit period will begin the first day you are admitted to a hospital. Emergency room visits don’t count unless you are admitted to the hospital directly from the ER. When you are first admitted to a hospital, you will have to pay your Medicare Part A deductible, which is $1,408 in 2020. Most popular Medicare Supplements will cover this cost for you.
Benefit Period End: Your benefit period will officially end 60 consecutive days after your release from the hospital or from rehab if there are no additional stays.
How Benefit Periods Add to Your Out-of-Pocket Costs
After 60 days at home, if you go back into the hospital, a new benefit period will begin. So, you would have to pay your Part A deductible all over again, just like the scenario in the first paragraph of this story.
Worst case, that means you could pay your Part A deductible up to five times in a calendar year – in addition to your regular coinsurance. Benefit period costs alone would amount to slightly more than $7,000 in 2020.
If Your Benefit Period Runs Long, You Could Pay Even More:
Here’s an example. Suppose you spend three days in the hospital and then go home.
Now suppose there are complications – which isn’t unusual – and so two weeks later, you go back to the hospital. Since you’re still in the same benefit period, you won’t have to pay your Part A deductible all over again. But don’t celebrate yet, because there is a catch.
After you have accumulated a certain number of days as an inpatient within a benefit period, you must begin paying a copay (coinsurance is the Medicare term) per hospital day. And it is big.
Your Daily Inpatient Costs Grow After 60 Days: After you accumulate 60 days as a hospital inpatient within a benefit period, Medicare wants you to pay $352 for each day you spend in the hospital for the next 30 days. That’s up to $10,560 more out of your pocket. They don’t have to be 60 consecutive hospital days.
Even Higher Inpatient Costs After 90 Days: What if you stay longer? Then you would have to pay $705, per day, for the next 60 days. That’s another $42,240. These are called Lifetime Reserve Days because they don’t renew. After that, coverage ends, and then you pay for everything.
Likewise, after you accumulate 20 days in a rehab facility (which Medicare officially calls a Skilled Nursing Facility or SNF) following a hospital stay, you must pay $176 per day, for the next 80 days, for up to$14,080. Coverage then ends at day 100 and you pay the total cost of rehab yourself.
How Can You Avoid Benefit Period Costs?
There are two ways to get rid of those deductibles and copayments:
- Medicare Supplement: Joining Plan F, Plan G or Plan N through HealthCareInsider.com would pay the entire Part A deductibles for you and extra hospital days, and 100% of days 21 to 100 in an SNF rehab facility, if they follow a hospital stay. (Note: Newly eligible Medicare beneficiaries can no longer enroll in Plan F as of 2020. However, current enrollees can continue their coverage and also consider changing plans, if able.) That’s why people buy supplements. These are also called Medigap plans.
- Medicare Advantage: Medicare Advantage, also known as Part C, plans replace your standard Medicare Part A and Part B. Your copayments would depend on the specific policy you chose.
When hospital bills come knocking, Original Medicare (Part A and Part B) begins to show its flaws. Many people find that having Original Medicare is not enough to shield them from big deductibles and copayments, like the two scenarios at the beginning of this article. If you feel the same way, then take the time to explore your extra coverage options on HealthCare.com.