Medicare is the federal health insurance program for adults aged 65 and older, as well as for some younger people. Medicare pays for inpatient hospital stays of a certain length.
Medicare covers the first 60 days of a hospital stay after the person has paid the deductible.
The exact amount of coverage that Medicare provides depends on how long the person stays in the hospital or other eligible healthcare facility.
A coinsurance cost applies after day 60 of the hospital stay. After day 90, the costs become the responsibility of the individual.
In this article, we describe Medicare’s coverage of hospital stays and look at how much a person may still need to spend out of pocket. We also explore the types of care facility that are eligible and ways to reduce out-of-pocket costs.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Funding for hospital stays comes from Medicare Part A.
Before Medicare covers the costs, a doctor needs to confirm that it is medically necessary for the person to stay in the hospital.
This coverage includes:
- general nursing care
- a semi-private room
- hospital equipment and services
- medication that is part of inpatient hospital treatment
Before Medicare starts covering the cost of a hospital stay, the insured person must meet the deductible. This amount changes each year. For 2020, the Medicare Part A deductible is $1,408 for each benefit period.
A benefit period starts on the first day of hospitalization and ends 60 consecutive days after the person’s discharge from the hospital or skilled nursing facility.
If a person needs to stay in a hospital again before the 60 consecutive days have passed, the second stay falls within the same benefit period as the first. They will not have to meet the deductible twice, in this case.
After the person pays their deductible, Medicare inpatient coverage begins.
However, depending on the length of their stay, a person may need to pay coinsurance out of pocket, as follows:
|Days in the hospital
|Coinsurance per day
|$0 after the deductible
|Days 91 and beyond
|After lifetime reserve days
|The insured person pays all costs
Medicare covers a hospital stay of up to 90 days, though a person may still need to pay coinsurance during this time.
While Medicare does help fund longer stays, it may take the extra time from an individual’s reserve days.
Medicare provides 60 lifetime reserve days. The reserve days provide coverage after 90 days, but coinsurance costs still apply.
In 2020, individuals pay $704 per reserve day. After the beneficiary uses the 60 lifetime reserve days, they will be responsible for all costs associated with the hospital stay.
Medicare Part A helps cover the costs of stays at different types of inpatient facility. However, coverage may vary, depending on the type of facility.
Medicare-approved inpatient facilities can be:
General acute care hospitals
Doctors at these hospitals provide care for relatively brief episodes of acute injury and illness.
For example, doctors at an acute care facility perform surgery and treat urgent conditions, such as a heart attack or stroke.
Inpatient psychiatric facilities
These provide mental health care. Medicare provides the same fee structure for general hospital care and psychiatric hospital care, with one exception: It limits the coverage of inpatient psychiatric hospital care to 190 days in a lifetime.
A rehabilitation facility provides care after an injury, illness, or medical condition. Services often include physical, occupational, and speech therapy.
Medicare covers an inpatient rehab stay if the doctor deems it medically necessary and expects it to improve the person’s health so that they can have more independent function.
Out-of-pocket expenses are the same for people staying in rehabilitation facilities as they would be for those in inpatient hospitals.
Long-term acute care hospitals
Long-term acute care hospitals specialize in treating medically complex conditions that may require extended hospital stays, of several weeks, for example.
After doctors at a general acute care hospital have stabilized a patient, the patient may be transferred to a long-term care hospital. Medicare coverage is the same at both types of hospital.
Skilled nursing facilities
These can provide various services, such as physical therapy, 24-hour nursing care, and help with daily activities such as washing and dressing.
Some people only require skilled nursing care for short periods while they recover from an illness or injury. Others, who may have long-term cognitive or physical conditions, require ongoing supervision and care.
Medicare Part A coverage for care at a skilled nursing facility in 2020 involves:
- Day 1–20: The patient spends $0 per benefit period after meeting the deductible.
- Days 21–100: The patient pays $176 per day.
- Days 101 and after: The patient pays all costs.
Medicare Part A does not cover the costs of long-term stays at skilled nursing facilities. However, if a person is transferred from one of these facilities to an acute care hospital, Medicare coverage may resume.
It may be possible for a person to pay less during an inpatient hospital stay — some Medigap or Medicare Advantage policies can reduce out-of-pocket expenses for inpatient treatment.
A person with a Medicare Advantage plan instead of traditional Medicare may have lower out-of-pocket expenses, such as daily hospital copayments.
However, Medicare Advantage plans vary in their level of coverage, and many of these plans only cover services at hospitals in the plan’s network.
A Medigap plan is a supplemental policy that a person can purchase through a private company.
This type of plan is not available to people who have Medicare Advantage.
Medigap insurance pays for costs that Medicare Part A does not cover. It pays for out-of-pocket expenses, such as coinsurance, and it covers hospital stays of up to 365 days.
Most Medigap policies also cover Part A deductibles for hospital stays. The cost of these policies depends on a few factors, including a person’s location of residence and age.
The extent to which Medicare covers the costs of inpatient care depends on the length of the person’s stay in the healthcare facility.
Also, Medicare only begins to pay for inpatient treatment once a person has paid a deductible. In addition, after day 60 of a hospital stay, a daily coinsurance applies.
This coverage may apply to stays in general acute care hospitals, rehab facilities, psychiatric hospitals, long-term care centers, and skilled nursing facilities.
Medigap policies or Medicare Advantage plans can reduce out-of-pocket costs of inpatient care.