Medicare Part A is the portion of Medicare that covers hospital care and related services. Unlike the other parts, it’s usually available without a premium.
Most people should enroll when they become eligible at age 65 (and if you’re already receiving Social Security, you’ll be enrolled in parts A and B automatically). If you’re receiving health insurance from a large employer when you’re 65, you could wait and enroll without penalty upon retiring. Or, you could enroll in premium-free Part A at 65 and enroll in the other parts upon retiring, but this strategy comes with risks (including potential late-enrollment penalties) and isn’t right for everyone.
Here’s how Part A works.
What it covers and doesn’t cover
What it covers
Original Medicare — the government-run part of Medicare that you can enroll in through Social Security — is made up of two parts: Part A and Part B.
While Part B generally covers doctor’s appointments and preventive care, Part A generally covers:
Nerd tip: Other parts of Medicare — including Part C (Medicare Advantage plans), Part D (prescription drug coverage) and Medigap plans — are governed by rules set by Medicare, but available through private insurers. If you sign up for a Medicare Advantage plan, an alternative to Original Medicare, it will include at least the same coverage provided in Original Medicare. However, you’ll be limited to a certain network and different rules may apply.
What it doesn’t cover
“The biggest misconception we get from people is, ‘Oh, I’m going to get Medicare and it’s going to cover everything,” says Jo Schneier, CEO and co-founder of Trusty.care, a Medicare quoting and enrollment tool for brokers. Deductibles can be costly, he notes.
There are also some services that seem like they might be covered by Part A, but actually fall under Part B or aren’t covered at all.
Here’s what’s not covered in Part A:
You can qualify for premium-free Part A if you or your spouse has worked and paid Medicare taxes for over 10 years, among other ways. To determine your eligibility, use Medicare’s eligibility calculator.
If you don’t qualify for premium-free coverage, you may be eligible to purchase Part A coverage.
“If you’re over 65 and you can afford it, it makes sense to pay for Part A,” says Schneier of Trusty.care, acknowledging that the premiums aren’t cheap. “Original Medicare plus a supplement is probably going to be the best insurance you have,” he notes, referring to Medigap plans.
Part A and employer health insurance
Enrolling in premium-free Part A and postponing the other parts of Medicare has long been a strategy used by folks to get more coverage at no upfront cost. But it doesn’t work in all cases. Before taking the leap, consider these questions.
Do you need to enroll in the other parts of Medicare at 65?
The answer depends on the size of your employer.
Before making your decision, confirm the details of your health coverage with your benefits manager.
Does it make sense to enroll in Part A and postpone the rest?
For those getting health care from a large employer, enrolling in Part A and delaying the rest until retirement might seem like a no-brainer — but there are caveats.
“We used to tell people, go ahead and get into Medicare A, there’s no fee,” says Katy Votava, president of Goodcare, a consulting firm for the management of Medicare costs and planning, and author of the book “Making the Most of Medicare: A Guide for Baby Boomers.” “But you don’t want to enroll in Medicare [Part] A if you have an employer plan that lets you put money into health savings accounts.”
That’s because you won’t be able to make tax-free contributions to your HSA while enrolled in Medicare, she notes.
These types of plans — high-deductible health plans with HSAs — have become more common in recent years, Votava notes. Even if you don’t have one now, your company might change its coverage options and you might end up in one before retirement, she adds. If you’re unsure of how your coverage might change, it might be best to wait until your special enrollment period and sign up for parts A and B at the same time.
When to enroll
If you’re already receiving Social Security or Railroad Retirement Board benefits, you’ll automatically start receiving Original Medicare — including Part A coverage — the month you turn 65, in most cases.
If not, here’s when you can enroll:
Those who aren’t eligible for a special enrollment period and miss the initial enrollment period are really in trouble, says Votava of Goodcare.
“They’ll not only pay penalties for the rest of their life, [but they’ll] have to wait long periods of time — it could be months, a year, or more than a year — before [they’re] eligible to start coverage,” Votava says. And in the meantime, she notes, they’ll be covering 100% of their medical costs out-of-pocket.
While there aren’t penalties for Part A if you’re getting it premium-free, there are penalties for enrolling late in Parts B and D, which grow larger the longer you postpone your enrollment. Before turning 65, make sure you understand the type of coverage you have and whether you’re eligible for a special enrollment period.