Medicare Part A is also called “Hospital Insurance” (HI) because it covers hospitalization needs, such as hospital inpatient care, skilled nursing facilities, hospice care, and some home health care (Medicare program, 2013). However, this coverage is limited and typically, beneficiaries must meet certain conditions in order to receive those benefits. For example, home health care is limited. The beneficiary must be recovering from an acute illness, be homebound, or the home health must be ordered by a doctor. In addition, it only covers skilled, intermittent care, which means less than seven days per week and less than eight hours per day. Furthermore, a home health aide (a person without a nursing license) is only covered if he/she is working in addition to a nurse or therapist and is not the sole caregiver for home health. Custodial care in a nursing home also has limitations. It is not covered if the beneficiary does not have an acute condition; therefore, someone with Alzheimer’s or other dementia does not have custodial care coverage through Original Medicare; this would only be covered through a supplemental plan (Learn about, 2012). Another example of a service that is not covered under Part A that can easily be misunderstood is outpatient hospital care. For example, if you go to the Emergency Room and are held there overnight for observation, it may seem like you were admitted as an inpatient because you stayed overnight; however this is actually an outpatient service that is not covered by Part A (DHHS, 2014).
Medicare Part A is the only aspect of Medicare that is partially financed by payroll taxes, which is why most people receive “premium-free Part A”. For most people, the Medicare payroll tax is 2.9% of earnings, where the employee pays 1.45% and the employer pays 1.45%. Therefore, if you are self-employed, you pay the entire 2.9%. These taxes are deposited into the Hospital Insurance (HI) Trust Fund (Learn about, 2012). As of 2013, because of the Affordable Care Act, this tax is higher for individuals with a larger income. For individuals who earn more than $200,000 per year and couples filing jointly who earn more than $250,000 per year, the Medicare tax rate increases by 0.9% to 2.35%. The employer does not match the additional imposed tax and this is also deposited into the HI Trust Fund (Kaiser Family Foundation [KFF], 2013). If you are not eligible for premium-free Part A, the monthly premium is $426 in 2014 and $407 in 2015. In addition, if you want to purchase Part A because you are not eligible for premium-free Part A, you must also purchase Part B. You are eligible for free Part A Original Medicare if (Part A costs, 2014):
- You or your spouse receive or are eligible to receive retirement benefits from Social Security.
- You or your spouse receive or are eligible to receive benefits from the Railroad Retirement Board (RRB).
- You or your spouse had Medicare-covered government employment.
- You are under age 65 and received Social Security or RRB disability benefits for 24 months.
- You have ESRD and meet certain other requirements.
Regardless of whether or not you have to pay a monthly premium, you are responsible for an annual deductible for Part A covered services. The Part A deductible is $1,288 and in 2016 (Costs at a glance, 2016).