A hospital stay is stressful enough without additional billing woes. But more seniors are facing unexpected expenses when Medicare’s observation billing doesn’t land in their favor.

Medicare laws state that inpatient stays, including short-term hospital care, must last three days or longer to qualify for Part A coverage. And more and more doctors are placing patients under “observation,” an outpatient status, instead of admitting them to the inpatient ward.

Does Medicare typically cover hospital observation?

In 2012, the average short-term inpatient stay cost Medicare $5,142, compared to $1,741 for a hospital observation stay. During fiscal year 2014, nearly 750,000 hospital stays were deemed outpatient — an 8% increase over the previous year. Medicare spending on hospital observation has jumped from $690 million in 2011 to $3.1 billion in 2016.

“Medicare covers hospital observation under Part B because they consider it as outpatient coverage,” but Part A only covers hospital care when you’re admitted as an inpatient.

That means patients who don't have Part B Medicare coverage would be responsible for the Part B deductible, plus the 20% copay.

Let us help you sort through all this and find the right coverage for you.