Many of us involved with lending a hand to older loved ones are not yet on Medicare ourselves and haven't had a chance to experience it's complexity first hand. Medicare isn't the easiest program in the world to learn on the fly.

Even people over 65 who've been part of it for a while sometimes come up against a wall of confusion. Every now and then we'll try to sort through some of the more confusing parts. Today it's Hospital Benefit Periods.

If you have medical insurance (non-Medicare) you're probably used to having an annual deductible. The annual deductible is the amount you must pay privately out-of-pocket every year before your insurance begins to pay. When you use your insurance you probably also make a co-payment whenever you see the doctor, fill a prescription, or use the hospital.

Your annual deductible is owed anew at the beginning of each year.

Medicare is the same, yet different, because it's divided into two parts (not counting the new Part D for prescriptions).

Part B covers doctors, laboratories, clinics, etc. The annual deductible, which re-starts every January, is $135 per year (in 2008 - it changes every year). Period. At the first of the year, the insured, or the insured's Medicare secondary insurer, must pay the first $135 of all covered costs before Medicare begins coverage. The insured, or the insured's secondary MediGap policy, will then pay a 20% co-pay for all covered services. This is fairly straightforward.

Part A covers hospitals and care received as an inpatient in a hospital. Part A also has a deductible ($1,024 in 2008), which the patient (or secondary insurer) must pay before Medicare hospital coverage begins. However, this deductible is not an annual deductible, it is a "Per Benefit Period" deductible.

This is where it gets tricky.

A benefit period starts on the day you go into a hospital or a skilled nursing facility. It ends after you have not received any hospital or skilled nursing care for 60 days.
Example: You spend 5 days in the hospital. You then return home. When you have been out of the hospital for 60 days your benefit period ends - 65 days after you entered the hospital. If you then return to the hospital, you or your secondary insurer owe another $1,024 deductible because you are in a new benefit period.

Example: You spend  5 days in the hospital. You then enter a skilled nursing facility for 20 days of rehabilitation. You then return home. Your benefit period will end when you have been out of the skilled nursing facility for 60 days, or 75 days after you first entered the hospital.

If you then re-enter the hospital another $1,024 will be due.

Example: You have returned home after being in the hospital, or in a combination of hospital and skilled nursing facility. After two weeks at home you must return to the hospital. You have not been out of care for 60 days, so you are still in your first benefit period. You do not owe another $1,024. Medicare will pick up where it left off.

There are no limits to the number of Benefit Periods a Medicare recipient may have. As long as the patient has been out of hospital or skilled nursing care for at least 60 days, a new benefit period is available.

So, if you are medically unlucky, you could have as many as 5 benefit periods in a year. This would cost you at least $5,120 in 2008 Benefit Period deductibles if you do not have a Medicare secondary (MediGap) policy. This is why these policies are so important.

So, you say, the secret is to just go back to the hospital inside the 60 day window? Medicare thought of that, and made sure that the economics of staying in the hospital would be even worse.