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Why Doesn’t Medicare Reimbursement cover 100% of my Medical Bills?

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Summary: Medicare reimbursement can leave you with out-of-pocket costs including copayments, coinsurance, and deductibles. You can get a Medicare Supplement insurance plan to help cover these costs.

Medicare is the leading insurer for people age 65 and over. According to the Centers for Medicare and Medicaid Services (CMS), more than 60 million people are covered by Medicare. Although Medicare covers most medically necessary inpatient and outpatient health expenses, Medicare reimbursement sometimes does not pay 100% of your medical costs.

This article explains Medicare reimbursement guidelines and what you can do if you are concerned about out-of-pocket expenses under Medicare.

How Medicare funding and Medicare reimbursements work

Medicare beneficiaries can be expensive to insure because everyone qualifies either by older age, disability, or serious illness. The majority of Medicare beneficiaries die while on Medicare. Many beneficiaries develop big medical bills while very sick.

Medicare funding comes from taxpayers, including general revenue and payroll taxes. According to the Kaiser Family Foundation, a distinct minority of Medicare revenue comes from beneficiary premiums. Your Medicare reimbursement amount depends in part on how much taxpayers are willing to contribute to your healthcare bills.

What is Medicare reimbursement for inpatient costs?

Most medically necessary inpatient care is covered by Medicare Part A. If you have a covered hospital stay, hospice stay, or short-term stay in a skilled nursing facility, Medicare Part A pays 100% of allowable charges for the first 60 days after you meet your Part A deductible. Medicare reimbursement covers you for up to 90 days per benefit period, but you have a daily coinsurance amount for days 61 through 90.

Medicare reimbursement also allows for an additional 60 “lifetime reserve days” after the 90th day in each benefit period. You pay a daily coinsurance amount for each lifetime reserve day as an inpatient.

There is generally no Medicare reimbursement once you’ve exhausted your lifetime reserve days; you may pay 100% of the charges. Medicare reimbursement is also not available for long-term care or custodial care in a nursing facility.

You may have more than one Medicare Part A deductible in a calendar year. Medicare Part A deductibles are based on benefit periods which are tied to the specific illness or injury requiring inpatient care.

What is Medicare reimbursement for outpatient care?

Medicare Part B covers most outpatient care, including:

  • doctor visits
  • outpatient diagnostic tests
  • outpatient procedures
  • mental health
  • ambulance trips
  • durable medical equipment
  • preventive care
  • certain outpatient prescription drugs
  • certain home health care services

Generally speaking, Medicare reimbursement under Part B is 80% of allowable charges for a covered service after you meet your Part B deductible. Unlike Part A, you pay your Part B deductible just once each calendar year. After that, you generally pay 20% of the Medicare-approved amount for your care.

Medicare reimbursement may be slightly different for certain outpatient services. Instead of a percentage amount, you may pay a flat copayment. Your provider should tell you at the time of service what amount is your responsibility and what is covered by Medicare reimbursement.

What is Medicare reimbursement for prescription drugs?

Medicare Part D Prescription Drug plans are actually private insurance plans. Most Part D prescription drug plans have an annual deductible, and you pay a copayment or coinsurance amount each time you fill a prescription.

Although these plans are regulated by CMS, they vary widely depending on the insurance company. Unlike Part A and Part B, each company that offers Part D Prescription Drug plans sets its own reimbursement policies. Keep in mind, however, that your out-of-pocket expenses under Part D do not count toward your annual deductible for Part B.

How can I get help with my costs after Medicare reimbursement?

If you signed up for Original Medicare (Part A and Part B), you can buy a Medicare Supplement insurance plan to help cover your out-of-pocket costs under Medicare Part A and Part B. Although Medicare Supplement insurance plans are private insurance policies, benefits are standardized by the federal government. The standardized plans cover different combinations of your Part A and Part B.

What does Medicare Supplement cover?

All Medicare Supplement insurance plans generally pay 100% of your Part A coinsurance amount, including an additional 365 days after your Medicare benefits are used up. In addition, each pays some or all of your:

  • Part B coinsurance
  • first three pints of blood
  • and Part A hospice coinsurance.

From there, plans add additional benefits, such as your:

  • Part A deductible,
  • your Part B deductible,
  • your Part B excess charges,
  • and skilled nursing facility coinsurance.
  • Some even have an allowance for foreign travel emergencies, which do not qualify for Medicare reimbursement from Medicare Part A or Part B.

Keep in mind, Medicare Supplement insurance plans generally do not pay expenses associated with Part D prescription drug coverage.

If you think you want help with your costs after Medicare reimbursement, it’s important to apply for a Medicare Supplement insurance plan when you are first eligible during your Open Enrollment Period. During the six-month period beginning the month you are both age 65 or over and enrolled in Part B, you can buy any Medicare Supplement insurance plan sold in your state regardless of your health status. If you wait, you may lose your guaranteed issue rights and have to pass medical underwriting before an insurer sells you a plan. If you have a chronic or serious health condition, you may not qualify for coverage.

To find a Medicare plan in your area that expands your Medicare reimbursement, enter your ZIP code on this page.

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