Inpatient vs. Observation Status
This is about doing your due diligence when you or a loved one is in the hospital. Thousands of dollars could depend on it, so read carefully. There are several distinctly different kinds of hospital patient classifications, but we’re only concerned here with inpatient and “observation” status. The key issue is whether you’ve been admitted or not.
What kind of Medicare coverage am I qualified for?
If you’ve been admitted, you are covered by Medicare Part A and Part B insurance. This changes what you will be charged for diagnostic tests such as x-rays, lab tests (blood work), and whether you’ll be covered if you need care at a skilled nursing facility following your hospital stay. As an inpatient your doctor’s fees and non-nursing medical care fall under Part B coverage, and it’s a good idea to have a Medicare supplement plan to pick up what out-of-pocket expenses aren’t paid by Original Medicare.
Part B also covers most of your costs in observation status, i.e. as an outpatient. This is when you get care from the emergency medical department, get outpatient (ambulatory) surgery, or get x-rays or lab tests without a written request from your doctor. This is called observation status because it’s when your doctor is assessing whether to admit or discharge you from the hospital. Surprisingly, you could be considered “under observation” even after several days of tests while staying at the facility.
Once you’ve been an inpatient for 3 consecutive days at minimum (including your admission, but not your discharge date), Part A will cover your skilled nursing care. Time in observation status does not count towards this. Because of this rule, it’s vital that the hospital keeps you for this 3-night minimum if your doctor is planning to send you to a skilled nursing facility after you leave the hospital.
What are my costs?
During the first 60 days you’re in the hospital, a one-time “benefit period” deductible is your responsibility. What this means is that you’ll have to pay a copay for individual outpatient hospital services. Your doctor’s fees will also be covered Part B, but without a Medigap policy you’ll be stuck with a 20% once the Part B deductible is met.
The 3 big questions
As soon as you or a loved one has begun a hospital stay, you need to know:
Still confused? Call us!
Table of Contents
If I have to go to the hospital, will Medicare cover both the diagnostic tests and inpatient costs if I have to be admitted?
Yes, Part B will take care of any Medicare-approved diagnostic tests, your doctor’s fees and any nonmedical care you receive. Once you’ve been an inpatient for 3 consecutive days at minimum (including your admission, but not your discharge date), Part A will cover your skilled nursing care.
Your inpatient doctor’s fees and non-nursing medical care will be covered under Part B, but it’s a very good idea to have a Medicare supplement plan to pick up what out-of-pocket expenses aren’t paid by Original Medicare.
- Best overall Medicare supplement for new enrollees: Plan G.
- Best overall Medicare supplement before 2020: Plan F.
- Best low cost Medicare supplement: Plan K.
- Best alternative to Plan G Medicare supplement: Plan N.
Medicare Supplement policies are private health insurance designed to cover gaps in Original Medicare. They are also known as Medigap plans. These take care of costs such as copays, coinsurance, and deductibles which can become expensive if you need regular care from a doctor or hospital. If you need medical care while traveling outside the U.S., you can buy Medigap policies to help cover those costs. As a supplement to Original Medicare, you’re required to have Part A and Part B before you canget a Medigap policy. This way, Medicare is responsible for the Medicare-approved costs of the covered care, and the remainder is covered by your Medigap plan.
Optimal coverage comes with higher costs, making Plan F the most expensive Medigap plan. Plan F is known as “first-dollar coverage” and it takes care of everything provided during a doctor or hospital visit. Your only responsibility is for dental, vision, medications, and equipment, such as hearing aids.
The Federal government ended the Plan F option for new enrollees last year to keep the healthcare system from being overused by patients who had their deductibles covered. The next best coverage after Plan F is Plan G.
Medigap Plan G offers every advantage of Plan F except for the deductible, which you have to cover. Because it isn’t as comprehensive as Plan F, Plan G is more affordable.
For people who don’t go to the doctor often, Plan K is worth considering. It is the most affordable because it provides just 50% of Medicare Part B coinsurance, the Part A deductible, blood, skilled nursing, and Part A hospice costs. For comparison, Plan G and others offer full coverage of these expenses, and more.
It’s hard to argue against plans which cut your traditional Medicare costs. For most people, having the extra coverage these supplemental plans provide is common sense, unless they want the specific features of a Medicare Advantage plan.
Most people would benefit from not having to pay out-of-pocket to stay healthy. Medicare supplement insurance or a Medicare Advantage plan offer vital savings now, but are indispensable should a catastrophic health issue occur.
Of the 10 Medicare-approved Medigap plans, Plan G and Plan N are the most popular. Plan F is no longer available to new Medicare enrollees as of 2020, but it is still popular among people who bought this plan prior to 2020.
- Plan F$128–$342
- Plan F (high deductible)$22–$88
- Plan G$106–$325
- Plan G (high deductible)$29–$58
Before getting a Medicare supplement plan, you need to be enrolled in Medicare Part A (hospital insurance) and Part B (medical insurance). People with Medicare Advantage Plans who want to go back to Original Medicare can buy a Medigap policy prior to switching.
The security of having lower or no out-of-pocket healthcare costs can offset the premiums you’ll have to pay for whichever Medigap plan you choose, which vary depending on the benefits offered.
The national average cost for Medicare Supplement Plan F is $1,824 annually, which is $152/month; Medigap Plan G will cost you around $143 per month.
Since Plan F was discontinued for new enrollees as of 2020, Plan G offers the most coverage for people 65 and older. It has a lower premium than Plan F and duplicates its benefits, except for the Part B deductible.
It depends on your specific needs, but for most people a Medigap plan is very useful in supplementing the coverage of Medicare Part A and Part B. A Medicare Advantage plan is an affordable way to get healthcare coverage not offered by Original Medicare.
Historically, Plan F has been the most popular because it covers all the out-of-pocket costs Medicare does’t pay for. This includes the 15% extra charge billed by providers who do not take Medicare as full payment.