Medicare coverage for hospital stays can be confusing. In order to understand what costs you might be responsible for, you need to understand a number of administrative factors.
1. In-patient vs. Out-patient
A hospital stay is classified as either in-patient or out-patient by the hospital based on the clinical assessment of your physician. It has nothing to do with whether you stay overnight at the hospital.
Among a variety of factors, it has to do with whether your condition requires your care in the hospital for two or more days (otherwise called midnights to signify that your condition required that you remain in the hospital for at least 48 hours that included two midnights). A formal in-patient admission must meet the two midnight rule.
If you are not formally admitted as an in-patient, your stay is considered out-patient. Again, as an out-patient you could still stay overnight.
There is nothing about your clinical care at a hospital that would enable you to determine if you have been admitted as an in-patient or not. In order to confirm that status, you need to ask, particularly since the Medicare coverage for that care is different for in-patient versus out-patient status.
2. Observation status
A form of out-patient care is Observation status. This is used to allow clinical care while your medical condition and needs are being more fully assessed. This, too, could involve an overnight stay while your physician determines if it is necessary to admit you as an in-patient or discharge you. If your observation status extends for more than 24 hours, the hospital should provide notice to you of that status and explain why you are remaining as out-patient. This notice is called the Medicare Outpatient Observation Notice (MOON).
The status of your care determines which portion of your Medicare benefits is responsible to pay for that stay. If you have traditional Medicare, the care is divided into 2 coverages for hospital care:
1. Part A covers the hospital costs for an in-patient stay.
2. Part B covers the costs for physician services for in-patient or out-patient care, and it covers all hospital costs for out-patient care.
Each Medicare part has its own deductibles and coinsurances. The Part A deductible is $1,316 for each benefit period. Please note, this is a benefit period and not a year. A benefit period begins when you enter the hospital and ends when you have been out of the hospital for at least 60 consecutive days. If you are in and out of the hospital within that 60 day period, you only pay the deductible once. However should you return to the hospital on day 61 or on any other day after that, you will have to pay a new deductible. Additionally, after you have met the deductible, you pay nothing for the first 60 days of in-patient, but pay $329 coinsurance for each day between 61-90 days. After 90 days, you pay $658 per lifetime reserve day. You have a total of 60 reserve days over your lifetime. Beyond the lifetime reserve days, you pay all costs.
For Part B, the yearly deductible is $183. Once that is met, Medicare will pay for 80% of the allowed charges, leaving you responsible for 20% of those allowed charges. If you have a secondary insurance, that policy will cover the remaining 20% after you satisfy any deductibles and copays that might apply to that policy. If you don’t have a secondary, you are responsible for the 20% remaining.
If you have a Medicare Advantage Plan, the costs for your hospital care are not universal. Each plan determines its own requirements of coverage, so you need to contact your plan to learn what deductibles and copayments you might be responsible to pay.
Hospital care is costly. All of the costs discussed here are for Medicare-participating hospitals and providers. It can be very helpful to understand your plan’s financial requirements before you access that care.