What is It?
Many of our Sears Holdings 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 Sears Holdings 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 Sears Holdings 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 Sears Holdings 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 Sears Holdings 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 Sears Holdings clients to be aware of specific services covered under Part A, these include:
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- 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 Sears Holdings 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
Sears Holdings 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 Sears Holdings 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 the Sears Holdings Pension Plan differentiate between normal retirement, early retirement, and late retirement options for Kmart participants? In what ways do these options influence the retirement planning process for employees of Sears Holdings, and what specific considerations should Kmart employees be aware of when choosing one of these retirement paths, particularly in relation to their vested status?
Differentiation of Retirement Options: The Sears Holdings Pension Plan offers distinct options for normal, early, and late retirement. Normal retirement is available at age 65 or after five years of plan participation, whichever is later. Early retirement can be taken from age 55 but before 65, provided the employee is vested, with benefits subject to actuarial reduction unless certain conditions are met (like having at least 90 points, which is a sum of age and years of credited service). Late retirement pertains to any retirement after the normal retirement age, with pensions recalculated to reflect the delay in benefit commencement.
Considering the frozen status of the Sears Holdings Pension Plan, how does this impact the benefits eligibility for Kmart employees, and what implications does it have for their retirement savings strategies? In what ways should current employees factor in this frozen status when evaluating their overall retirement readiness and potential alternatives outside of the company plan?
Impact of Frozen Status: The freezing of the Sears Holdings Pension Plan on January 31, 1996, means that there have been no new accruals of benefits or participants since that date. For Kmart employees, this impacts their benefits eligibility by capping the pension benefits at levels earned up to the freeze date. Employees need to consider this stagnation in benefits when planning for retirement, potentially seeking additional retirement savings avenues to bridge any shortfall.
What are the essential calculations involved in determining the retirement benefits under the Sears Holdings Pension Plan for Kmart employees? Specifically, how do the Career Average Pay and Final Average Pay formulas come into play, and what factors should employees consider when estimating their future retirement payouts?
Essential Calculations for Retirement Benefits: Pension benefits for Kmart employees under the Sears Holdings Pension Plan are calculated using either the Career Average Pay or the Final Average Pay formulas. These calculations take into account an employee's years of credited service and compensation up to the freeze date. Factors like estimated Social Security benefits and specific formulas (such as a deduction based on Social Security benefits under the Final Average Pay formula) play crucial roles in determining the final pension payout.
How can Sears Holdings employees best navigate the process of applying for benefits under the Pension Plan? What specific steps should participants take to ensure their applications are processed correctly, and what important deadlines should they be aware of to avoid any negative consequences on their retirement benefits?
Navigating the Benefits Application Process: To apply for pension benefits, employees must submit a formal application, ideally 30 to 90 days before the intended commencement date. It is crucial to ensure all personal information, including marital status and spouse details, is up-to-date to avoid delays or inaccuracies in benefit processing. Missing application deadlines can lead to postponed benefit payments or unwanted default options.
In what situations can Kmart employees expect to receive a Deferred Vested Pension, and how is the calculation for this pension affected by their previous employment and vesting service? Employees should be aware of the important factors influencing their eligibility and the steps necessary to maintain their retirement benefits after leaving the company.
Eligibility and Calculation for Deferred Vested Pension: A Deferred Vested Pension is available to employees who leave the company after becoming vested but prior to qualifying for retirement. The calculation mirrors that of a normal retirement pension, with possible early commencement reductions. Understanding the timing of benefit commencement and the potential reductions for early start is vital for planning.
How does the Sears Holdings Pension Plan address tax considerations for employees receiving both monthly payments and lump sum payments upon retirement? What tax implications should Kmart participants be aware of, particularly in relation to IRS rules for distributions and potential penalties for early withdrawal?
Tax Implications of Pension Receipt: Pension payments, whether monthly or lump sum, are subject to federal taxes. Monthly benefits are taxed as ordinary income, while lump sums might be eligible for special tax treatments or rollover options to defer taxes. It’s important for Kmart employees to consider these implications and possibly consult with a tax advisor to optimize tax liability.
What are the rights and protections afforded to Kmart participants under the Employee Retirement Income Security Act (ERISA) as they navigate their retirement benefits with the Sears Holdings Pension Plan? How can employees leverage these rights to ensure they are receiving all the benefits to which they are entitled?
ERISA Rights and Protections: Under ERISA, Kmart employees are entitled to certain rights including the ability to appeal denied benefits, access to plan information, and assurances of fair and equitable treatment of their benefits. Leveraging these protections ensures that employees receive all due benefits.
What steps should Kmart employees take to update their personal information to ensure they continue receiving their benefits without interruption, especially in the context of missing participants or uncashed checks? What resources and contacts at Sears Holdings are available to assist with these updates?
Updating Personal Information: Maintaining accurate personal information with the pension plan is crucial for uninterrupted benefit payments. Employees should promptly update changes such as address, marital status, or beneficiaries to prevent issues with benefit distributions or lost checks.
How does the process of transferring between affiliated employers impact pension benefits for Kmart employees under the Sears Holdings Pension Plan? What considerations should be taken into account concerning Credited Service and Vesting Service during such transfers, and how can employees ensure they do not lose any entitled benefits?
Impact of Transfers Between Affiliated Employers: Transferring between Sears Holdings’ affiliated employers can affect pension benefits differently depending on whether the employer participates in the pension plan. It's essential to understand how such transfers impact credited and vesting service accruals.
For Kmart employees seeking more information about their benefits under the Sears Holdings Pension Plan, what is the best way to contact company representatives? How can they effectively communicate their questions or concerns to ensure they receive accurate and timely information regarding their retirement benefits?
Contacting Plan Representatives: Kmart employees seeking clarity on their pension benefits should contact the Sears Holdings Pension Service Center. Effective communication, including prepared questions and necessary documentation, will aid in obtaining accurate and comprehensive information.