What is It?
Many of our Cummins Inc clients have questions regarding Medicare Part A. Medicare Part A is the portion of Medicare that is available premium free to all eligible individuals*. Medicare Part A provides services associated with the hospital, hospice, skilled nursing care, and home health care.
Albeit Part A's free nature for most individuals, it's important that our Cummins Inc clients know that those who need to buy coverage could pay near $499 per month. Furthermore, there are potential additional costs we'd also like our Cummins Inc employees to be aware of, such as:
- $400 per day coinsurance payment in 2023 for in-patient hospital stays for days 61 to 90 (an increase of $11 from $389 in 2022).
- 20% copay for Medicare-approved durable medical equipment (DME).
- $200 in 2023 coinsurance payment for days 21 to 100 for a skilled nursing facility stay (an increase of $5.50 from $194.50 in 2022).
- 20% copay for mental health services connected with a hospital stay. (1)
What does Medicare Part A cover?
Another question we receive a lot from our Cummins Inc clients is in regards to what Medicare Part A covers. Part A covers the costs associated with these types of health care:
- Inpatient hospital stays
- Stays at a skilled nursing facility (i.e., where medically necessary skilled nursing and rehabilitation care are provided), in contrast to a nursing home providing custodial care
- Home health care
- Psychiatric inpatient care
- Hospice care
Medicare Part A Coverage is Based on Benefit Periods
How Are Benefit Periods Determined?
Now some of our Cummins Inc clients may be wondering, how are benefit periods determined? Medicare Part A coverage is tied to a benefit period of 60 days for a spell of illness. A spell of illness benefit period commences on the first day of your stay in a hospital or in a skilled nursing facility and continues until 60 consecutive days have lapsed and you have received no skilled care. Medicare does not cover care that is or becomes primarily custodial, such as assistance with bathing and eating. A deductible applies for each benefit period.
Your benefit period with Medicare, the spell of illness, does not end until 60 days after discharge from the hospital or the skilled nursing facility. Therefore, if you are readmitted within those 60 days, you are considered to be in the same benefit period. On the other hand, Medicare considers it a new spell of illness if you are readmitted more than 60 days after discharge. The good news is that this means that if you are readmitted within 60 days, you are not charged another deductible; the bad news is that your previous admission is tacked on to the second one in calculating the percentage amount Medicare will cover since Medicare full coverage is only for 60 days. There is no limit on the number of spells of illness Medicare will cover in your lifetime.
Example(s): Uncle George goes into the hospital June 1 and is discharged July 31. On November 1, he is readmitted to the hospital. Once he pays his deductible again, Medicare will pay all his costs until December 30. If, however, George is readmitted to the hospital within 60 days of his July 31 discharge, there is no additional deductible.
Coverage for Inpatient Care in a Hospital
For inpatient hospital stays, Medicare will pay:
- 100 percent of costs for up to 60 days of inpatient care, after you pay the deductible. You pay $1,556 per benefit period in 2022.
- After 60 days, beneficiaries are responsible for coinsurance costs. In 2022, beneficiaries must pay $389/day.
- Beneficiaries are also entitled to a lifetime reserve of 60 additional days. If those reserve days are also used, beneficiaries must pay $778/day in 2020 for days 91 to 150.
- If you choose not to use your lifetime reserve, all Medicare coverage stops after 90 days of inpatient care or after 60 days without any skilled care for this spell of illness. (2)
Tip: Part A coverage pays for all Medicare-approved inpatient hospital costs except for your physician bills, which are covered under Part B. Medicare approves costs considered reasonable and medically necessary.
Specific Services Covered Under Part A
We'd like our Cummins Inc clients to be aware of specific services covered under Part A, these include:
Featured Video
Articles you may find interesting:
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
- A semi-private room
- Meals
- General and skilled nursing services, including nursing in special care units such as intensive care
- Medications administered while in the hospital
- Clinical laboratory tests
- X-ray and radiotherapy
- Medical supplies, such as dressings and intravenous lines
- The use of equipment such as wheelchairs
- Operating room and recovery room charges
- Rehabilitation services, such as physical therapy and speech pathology, provided in the hospital.
It's important that these Cummins Inc employees note that Medicare will not pay for items considered luxuries, such as a television in your room or for a private room, unless your condition renders it medically necessary.
Coverage for Skilled Nursing Facility Care
What is a skilled nursing facility? The short answer is--not a nursing home. Medicare does not cover nursing home care but does cover care in a skilled nursing facility, which may be housed in a nursing home or in a hospital or may be freestanding. The significant attribute is the kind of care provided. A skilled nursing facility provides medically necessary nursing and/or rehabilitation services.
To receive Medicare coverage for care in a skilled nursing facility:
- A physician must certify that you require daily skilled care that can only be provided for an inpatient in a skilled nursing facility
- You must have been an inpatient in a hospital for at least three consecutive days for the same illness or condition before being admitted to the skilled nursing facility
- Your admission to the skilled nursing facility must be within 30 days of discharge from the hospital to receive Medicare
- The facility must be Medicare-approved to provide skilled nursing care
Coverage is limited to a maximum of 100 days per benefit period. $194.50 is charged per day between days 21 - 100, and all costs are charged beyond day 100 in 2022. (3)
Coverage includes:
- A semi-private room
- Meals
- Rehabilitation services
- Prescription drugs administered while in the facility
Coverage for Home Health Care
Home health care is care provided to you at home, typically by a visiting nurse or home health care aide. Medicare Part A covers medically necessary home health care offered by an agency certified by Medicare to provide home health care. The home health agency agrees to be paid by Medicare and to accept only the amount Medicare approves for their services.
To receive home health services under Medicare, the following rules apply:
- You must be confined to your home
- Your physician must certify the care as medically necessary and approve the treatment plan
Cummins Inc employees should also be aware that:
- Medicare does not cover care that is primarily custodial, such as assistance in performing daily tasks
- Medicare will cover services such as nursing service, physical therapy, speech therapy, occupational therapy, and 20 percent of the cost of durable medical equipment, such as a wheelchair
- Currently, there are no benefit periods, deductibles, co-payment, or coinsurance requirements for home healthcare
Coverage for Psychiatric Hospitalization
For inpatient psychiatric care, Medicare Part A will pay for the same kinds of services as if you were hospitalized in a general hospital:
- Semi-private room
- Meals
- Nursing care
- Rehabilitation services, such as physical or occupational therapy
- Prescription drugs administered in the hospital
- Medical supplies
- Lab tests, X-rays, and radiotherapy
An important distinction from care in a general hospital is that you must use a facility that accepts Medicare assignments on all claims. Deductibles and coinsurance costs are the same as for a regular inpatient hospital stay. In the course of your life, Medicare will only pay for 190 days of inpatient psychiatric care (lifetime limit).
Coverage for Hospice Care
Hospice care is care for the terminally ill. Hospice care covered by Medicare Part A is comprehensive coverage, at home or in a facility where you live, for symptom management and pain control for the terminally ill. To receive coverage:
- The healthcare provider must be certified by Medicare to provide hospice care
- The patient's doctor and the hospice care director must certify that the patient is terminally ill (i.e., has a life expectancy of six months or less)
- The patient must elect hospice coverage for the terminal illness instead of standard Medicare benefits, although Medicare will continue to cover care provided that it is not related to the terminal illness
Services include nursing care, medical appliances and supplies, prescriptions, home health aide and homemaker services, medical social services, and counseling.
There are two categories of costs for which a Medicare hospice patient may be responsible:
- A co-payment of up to $5 for each outpatient prescription for pain relief or symptom management.
- Respite care. The hospice may arrange for the hospice patient to be moved to an inpatient facility for up to five days at a time to provide respite to the hospice care personnel. The Medicare beneficiary may be charged a nominal daily fee for the inpatient care (5 percent of the Medicare-approved amount for in-patient respite care).
We'd also like our Cummins Inc clients to note that Medicare does not cover room and board when you get hospice care in your home or a facility where you live.
1. 'How much does Medicare cost in 2022 and 2023? Parts A, B, C and D' (humana.com, 2022)
2,3. 'What is Medicare Part A?' (policygenius.com 2022)
How does Cummins determine eligibility for participation in the Cummins Pension Plan, and what are the implications for employees who temporarily leave the workforce? This inquiry should delve into the specific criteria that define an eligible employee, such as citizenship requirements and exclusions, as well as the continuation of benefits and service credit during approved leaves or breaks in service at Cummins. It would also explore the complexities surrounding vesting and how service prior to a break is credited upon re-employment at Cummins.
Eligibility and Participation in the Cummins Pension Plan: Eligibility for the Cummins Pension Plan requires being an active employee, not participating in another Cummins defined benefit pension plan, and meeting certain citizenship or residency criteria. During approved leaves of absence, employees continue to accrue service credits, ensuring continuous growth in their pension benefits. Notably, vesting occurs after three years of service, securing the employee's entitlement to pension benefits upon leaving the company. The plan handles breaks in service by allowing reemployment within 12 months to count towards vesting and benefit calculations, safeguarding employee benefits against temporary disruptions in their career with Cummins.
What are the potential benefits and limitations of the forms of distribution available under the Cummins Pension Plan, and how should employees prepare for their pension benefit election? This question requires an analysis of various forms of distributions, such as lump sums versus annuities, highlighting the financial implications of each choice, particularly in relation to the IRS rules for 2024 regarding tax treatment. Employees should also consider how their family structure (e.g., marital status, dependents) may influence their decisions when electing a distribution method.
Distribution Forms and Tax Considerations: The Cummins Pension Plan offers various distribution forms, including lump sums and annuities, each with distinct tax implications under IRS rules for 2024. Employees must consider their family structure and tax status when choosing a distribution form, as these factors influence the tax treatment and financial outcome of their pension benefits. The plan provides clear guidelines on these options, ensuring employees can make informed decisions that align with their personal and financial circumstances.
In what ways do pay credits and interest credits accrue within the Cummins Pension Plan, and how can employees gauge their potential retirement benefits over time? This question will focus on the specifics of how pay credits are calculated based on an employee's compensation and service at Cummins, as well as the impact of interest credits on the total account balance and long-term retirement planning. It will also examine how employees can track these credits through the Cummins retirement resources.
Accrual of Pay and Interest Credits: The pension benefits at Cummins accrue through pay credits based on compensation and service, along with interest credits. Employees can monitor their accumulating benefits through the Cummins retirement resources, offering transparency and planning advantages. This structured accrual method supports employees in projecting their future pension benefits and making informed decisions about their retirement timing and financial needs.
How does Cummins ensure compliance with ERISA and other regulatory standards in the management of the Cummins Pension Plan, and what rights do employees have under these regulations? This query should explore Cummins' obligations as a fiduciary in managing employee benefits and highlight the key rights of plan participants. The discussion should include access to plan documents, the process for filing claims, and the significance of ERISA protections for employees retired from Cummins.
Regulatory Compliance and Employee Rights: Cummins diligently adheres to ERISA standards in managing the pension plan, emphasizing fiduciary responsibility and ensuring participants' rights are upheld. Employees have rights to access plan documents, participate in claims and appeals processes, and are protected under ERISA from any plan-related discrimination. This regulatory compliance not only secures the integrity of their pension benefits but also reinforces the legal framework protecting participant rights.
What role does the Pension Benefit Guaranty Corporation (PBGC) play in safeguarding the retirement benefits of Cummins employees, and how does this affect the perception of the plan's reliability? This question would examine the insurance coverage provided by the PBGC, what types of benefits are guaranteed, and under what circumstances benefits may not be fully covered. Employees might analyze how this federal insurance impacts their confidence in the plan, especially in light of changing economic conditions.
Role of the Pension Benefit Guaranty Corporation (PBGC): The PBGC insures the pension benefits under the Cummins Plan, providing a safety net that enhances the reliability of these benefits. Employees covered by the plan can gain confidence in the security of their pensions, knowing that even in the face of potential plan termination, the PBGC guarantees the core benefits, subject to certain legal limits and conditions.
How does the Cummins Pension Plan interface with employees' Social Security benefits, and what should retirees consider when planning for a sustainable retirement income? This inquiry will look at the coordination of benefits under the Cummins plan with Social Security, examining how pension income might influence Social Security calculations. It would require discussions on the timing of retirement elections and how they align with Social Security claims.
Interaction with Social Security Benefits: The Cummins Pension Plan is designed to integrate smoothly with Social Security benefits, offering provisions that help plan participants optimize their total retirement income. Understanding this interaction allows employees to strategically plan their retirement age and benefit commencement, maximizing their financial stability in later life.
What are the specific procedures and deadlines that Cummins employees should follow to successfully elect a distribution from the Cummins Pension Plan upon retirement? This question will necessitate a detailed look at the steps involved in initiating a benefit distribution, including the importance of spousal consent, the timing of application submissions, and any documentation that may be required. Understanding these processes can significantly affect the financial outcomes for retirees.
Procedures and Deadlines for Electing Pension Distribution: The Cummins Pension Plan outlines specific procedures and deadlines for electing a distribution upon retirement, emphasizing the importance of timely and informed decision-making. By understanding these processes, employees can avoid delays and ensure that they receive their pension benefits in the manner that best suits their post-retirement financial plans.
What are the implications of choosing to defer pension benefits and how does the Cummins Plan accommodate employees who opt not to start their benefits at the normal retirement date? This inquiry could address the potential financial consequences of deferring benefits, including eligibility requirements for such deferral and how it aligns with IRS regulations. Employees should critically evaluate their financial situations and retirement goals, weighing the allure of continued employment against starting their retirement benefits sooner.
Deferring Pension Benefits: Employees at Cummins have the option to defer their pension benefits beyond the normal retirement date, which can influence the financial value of their benefits. The plan provides guidelines on how deferral impacts benefit calculations and distributions, assisting employees in making decisions that align with their long-term financial goals.
How can Cummins employees designating beneficiaries ensure that their wishes are respected concerning death benefits, particularly in light of recent changes in the pension landscape? This question focuses on the options available to employees for designating beneficiaries, the process for updating these designations over time, and the specific forms that need to be completed to ensure compliance with the Cummins Pension Plan. It will also discuss the impact of state and federal laws on these designations.
Designating Beneficiaries and Ensuring Compliance: The plan stipulates clear processes for designating beneficiaries for pension benefits, ensuring that employees' wishes are respected and legally documented. This is crucial for planning and securing financial provisions for survivors, reflecting the plan's comprehensive approach to retirement benefits.
How can Cummins employees contact the Cummins Retirement Benefits Service Center to obtain more information about the Cummins Pension Plan and related retirement processes? This question emphasizes the various channels through which employees can reach out to the service center, the types of queries they can address regarding the Cummins Pension Plan, and the resources available online to assist with pension-related inquiries. Employees are encouraged to take advantage of these resources to make informed decisions regarding their retirement planning.
Accessing Information and Assistance: Cummins provides multiple channels for employees to access information and assistance regarding their pension plan, including online resources and a dedicated service center. This accessibility ensures that employees can obtain detailed information and personalized support, enabling them to navigate their pension benefits effectively.