What are the common Medicare pitfalls that I might run into?

One of the more alarming features of Original Medicare is that it comes with no out-of-pocket limit. 

An out-of-pocket limit is the maximum amount you will be charged for covered health care in a year. This limit prevents you from becoming overwhelmed by medical costs in the unfortunate event that you need to receive several costly medical procedures within a short span of time. 

Payments made toward deductibles and copayments all count toward an out-of-pocket limit when one exists as part of a health plan. As a result, private or employer-provided health plans would normally pay 100% of the covered medical services after you have met your out-of-pocket limit for that year.

Original Medicare, however, does not offer out-of-pocket limit protection. Your financial burden could quickly impact your finances should a declining health issue require more than expected doctors’ visits, tests, outpatient procedures and hospitalizations.

Original Medicare coverage was devised at a time when hospital costs and doctors’ fees were much more affordable. Given today’s sky-high medical costs, it may be risky to not have at least an annual cap on your out-of-pocket payment responsibility. 

Except for limited cases, Original Medicare does not cover prescription drugs that you take at home. Prescription drug coverage through Medicare is provided at an additional enrollment and cost via Medicare Part D. 

Most private or employer health plans come with a fixed annual deductible – once you pay the deductible each year, you do not have to pay it again until the next year. Medicare Part A, on the other hand, comes with a variable deductible system, organized around the concept of “benefit periods”.

The more benefit periods you use, the more deductibles you must pay. A benefit period starts on the day you are formally admitted into a hospital and ends 60 days after you have stopped receiving inpatient care from either the hospital or a nursing facility. Under this system, once you have gone 60 days without receiving inpatient care, a new benefit period will start.

This system makes it possible for you to experience as many as 5 benefit periods in a single year. Because you must pay the Part A deductible each time a new benefit period starts ($1484.00 in 2021), you could end up paying as much as $7420.00 out-of-pocket if you use all 5 benefit periods in a given year. The next year, the system starts all over again. 

 This aspect of Original Medicare can sometimes cause confusion. Make no assumptions about coverage. Ask!  

Example:  You are formally admitted to a hospital by a doctor and the nurse tells you that your inpatient hospital stay is fully covered by Medicare Part A, don’t assume that doctors treating you in the hospital will be paid for by Medicare Part A.

In almost all cases, doctors’ services are covered only by Part B, and you may be billed separately for those services. In fact, what frequently occurs is that one hospital stay may result in 2 or more billings – one by the hospital, (for the use of its facilities and nursing staff), and additional bills for the doctors who treated you.

Medicare Part B, (which covers doctors’ services), comes with its own deductible. After you meet that deductible, in most cases you will also be required to pay 20% of the cost for the medical services that you have received. Therefore, as a hospital inpatient, you must pay the Part B deductible ($203.00 in 2021), plus 20% of the cost for doctors’ services.

This “Part A” plus “Part B” scenario means that if you are formally admitted as an inpatient into a hospital, you must pay the Part A deductible, plus the Part B deductible, plus 20% of the doctors’ fees.

The confusion arises because it is common to receive the doctors’ bills well after you have already paid the hospital bill. After paying the hospital, it is understandable to think that you have completely cleared your healthcare payment obligations for that hospital stay. Unfortunately, because the doctors’ bills may be separately handled, that may not be the case, and a later arrival of those bills can be an unwelcome surprise. 

These rules are sometimes quite different from the rules that govern most private and employer health plans.

Under Original Medicare, your outpatient copayment obligations may vary by (1) the type of procedures you had; (2) the location where the procedures were performed, or (3) the outcome of the procedures. These variable factors make your payment obligation hard to predict.

To help explain complex rules, let’s take a colonoscopy for example.

Under current health law, many routine screenings to prevent diseases are free. These free screening procedures include the so-called “screening colonoscopy” that aims at early detection of polyps in the large intestine because those polyps could lead to cancer.

When polyps are found during a screening colonoscopy, they are immediately removed. Under current health law, doctors contracted with a private or employer health plan are not permitted to charge you an extra fee for the removal of the polyps.

Under the same circumstances, however, Original Medicare would allow your doctor to charge you an extra fee if the polyps are discovered and removed during a “screening colonoscopy”, even though the colonoscopy started out as a routine screening procedure which should have been free in the first place.  But in the eyes of Medicare, the outcome of the procedure changed your payment obligation.  Once polyps are found and removed, Medicare changes the classification from a “screening” to a “medical treatment”, and medical treatments often require a copayment from the patient.

But that bit of confusion isn’t even the worst of it.

If your doctor’s office is not equipped for outpatient procedures, and you had to undergo your routine colonoscopy and polyp removal in a hospital, under Original Medicare, you may be billed an additional fee up to the Medicare Part A deductible ($1,484.00 in 2021). 

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