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Medicare Part A

 Medicare is a federal program that provides health insurance coverage for people who are age 65 or older. Individuals younger than 65 may qualify if they have certain disabilities or have End-Stage Renal Disease (ESRD). Medicare is comprised of four parts — Parts A, B, C, and D. We have defined each of the four parts individually.

Definition: Medicare Part A pays primarily for inpatient hospital stays, care in skilled nursing facilities (not long-term care), some home health care, and hospice care.

History: Medicare Part A began in 1965 and was enacted at the same time as Part B and Medicaid. At the time, older Americans who did not have health care coverage through their employers, had to either purchase health insurance on their own (which could be expensive) or rely on their families to help pay for their medical care. More information on the history of the Medicare program can be found here.

Financing: Medicare Part A is financed through a payroll tax paid by employers and employees. Part A currently pays out more in claims than it collects in revenue and is projected to become insolvent by the year 2026. In 2018, total expenditures (costs) for the Medicare program were $740.6 billion and total income was $755.7 billion. Each year the independent Medicare Trustees releases a report projecting the solvency of the program. Information on the most recent Trustees’ report is available here.

Enrollment: Currently 59.9 million Americans are enrolled in Medicare Part A.

Eligibility: In order to be eligible for Medicare Part A, you (or your spouse) must have worked at least 10 years (40 quarters) in Medicare-covered employment. Some individuals under age 65 may be eligible for Medicare Part A if they are entitled to Social Security (or railroad retirement) disability benefits for at least the previous 25 months or qualify for ESRD benefits. More information on eligibility requirements can be found here. Out-of-Pocket Costs: Beneficiaries enrolled in Part A pay a deductible when they are admitted to the hospital. The amount of the deductible varies from year to year and is calculated to be $1,408 in 2020. This deductible covers beneficiaries’ costs for the first 60 days of care within a benefit period. Beneficiaries pay additional fees for hospitalizations longer than 60 days (for more information, see here).

Premiums: About 99 percent of individuals who have Part A do not pay a premium. However, some individuals may be able to enroll in Part A and pay a monthly premium: individuals (and spouses) with fewer than 30 quarters (7.5 years) of Medicare-covered employment pay a premium of $458 and individuals (and spouses) with between 30 and 39 quarters of Medicare-covered employment pay $252. (More information is available here.)