Medicare Beneficiaries And The Cost Of Treating Covid-19
As the Covid-19 pandemic stretches on, individuals continue to be at risk. This is especially true for the senior population, many of whom are enrolled in Medicare.
As of mid-September, Medicare beneficiaries accounted for about 1.2 million U.S. Covid-19 cases. Over a quarter of those required hospitalization. Between medications, hospital bills and ongoing treatment, the cost of Covid-19 could significantly impact a person’s budget. This makes it vital to understand how Medicare applies during the pandemic.
Before I go further, though, it’s important to keep in mind that my expertise lies in Medicare, not healthcare, and that exact costs for treating Covid-19 will differ from person to person, based on their situation. My goal here is to help the senior population understand how Medicare will be there to help during these unprecedented times and to help alleviate some concerns.
There are two main concerns I hear surrounding costs when talking to those on Medicare about Covid-19. The first concern surrounding costs is the testing. Many seniors will need multiple tests as different exposure risks occur. For those with Medicare, testing falls under Part B, but federal regulations have ensured there are no out-of-pocket costs for Covid-19 tests. Additionally, those with Medicare do not need an order from a treating physician to get a test.
The second concern surrounding costs is associated with vaccination. With the recent rollout of a Covid-19 vaccine, the senior community has been included in the first waves to receive the medication. Based on language in the CARES Act, Medicare Part B medical covers an FDA-approved Covid-19 vaccine. That means no out-of-pocket payment.
For beneficiaries with traditional Medicare, the breakdown for out-of-pocket costs is straightforward for hospital and medical expenses. Those hospitalized with Covid-19 must first pay the Part A hospital deductible. This out-of-pocket cost is $1,484 in 2021. If you are discharged within the first 60 days of a hospital stay, that will be your only responsibility under Medicare Part A. If you must be in the hospital longer than 60 consecutive days, there is a coinsurance per day of $371 in 2021 that you are responsible from days 61-90. If you find yourself in the hospital more than 90 days, you will have up to 60 “lifetime reserve days” of coverage available. These can only be used once in a person’s life. If you use reserve days, the rate is $742 per day. You can see that even with traditional Medicare, a long hospital stay could have some serious financial consequences.
The good news is preliminary data shows that about half of the seniors who need hospitalization due to Covid-19 are there no longer than a week. Only 16% of seniors are hospitalized for eight to 10 days, and 14% are there 11-15 days. Beyond that, the percentages drop dramatically. This means the odds are in your favor that you will not pay past your Medicare Part A deductible.
If a positive diagnosis leads only to a doctor’s visit, you will not have to worry about the Medicare Part A deductible. Even with Covid-19, a doctor’s visit is subject to the charges laid out in the medical side of Medicare, known as Part B. This means you will be responsible for paying the deductible of $203 in 2021. Services on top of that will require you to pay 20% out of pocket. The problem is there is no cap to the 20% out-of-pocket cost.
One option for avoiding this problem is to look into a Medigap supplement policy. If your Medicare coverage includes a Medigap policy, costs may have a different structure for you. Medigap policies are standardized by Medicare to help cover the costs that Medicare does not pay. This may lead to a smaller personal expense if you get sick because most plans will cover the Part A deductible and the Part B 20% out-of-pocket. These plans do come with a monthly premium. However, this could help you budget your out-of-pocket costs.
There is also the possibility of potentially decreasing your out-of-pocket costs by selecting a Medicare Advantage plan. These plans are alternative plans to traditional Medicare. Unlike traditional Medicare, these plans come with spending limits. This factor can help you calculate, in advance, how much it might cost if you should get sick. This also can help you estimate the most your healthcare could cost you in a single year.
It is clear that contracting Covid-19 will come with a cost. However, having Medicare greatly decreases that total. With detailed information on copays and deductibles, it is possible to budget your costs for Covid-19 treatment. Beneficiaries also have the option to select a Medigap policy to supplement traditional Medicare, which will help cover some unforeseen expenses, or to look into an alternative plan, known as a Medicare Advantage plan.
Although Medicare has stepped up to cover the testing of Covid-19 and an FDA-approved vaccine, this does not mean you should let your guard down with regard to planning for healthcare costs. The pandemic should encourage you to take some time to reevaluate your health insurance. One nice thing about Medicare is there are programs that will allow you to budget your healthcare expenses. This is extremely important if you are on a fixed income. From my experience, those who budget their healthcare needs while on Medicare seem to have a little less stress when an unforeseen medical situation arises.
When facing the risk of Covid-19, it is good to have concrete information on all the coverage options that Medicare plans provide. It is easy to feel confused about what your specific policy includes and what it does not. Working with a knowledgeable insurance agent can help ensure you understand your Medicare plan completely. Your agent can also answer your questions and offer suggestions on enhancing your plan to better prepare for life within the pandemic and beyond.