Medicare Clients – Beware of “Observation Status”

NPR correspondent Alison Kodjak’s mom was admitted to the hospital for four nights after a fall. Because the hospital said she was an outpatient, Medicare wouldn’t pay for her rehabilitative care.

Medicare isn’t perfect, be aware and ideally be prepared – How Medicare’s Conflicting Hospitalization Rules Cost Me Thousands Of Dollars

This problem occurs when you are placed in “observation status” at the hospital instead of officially admitted.

Is there anything that can be done to combat this issue? The real solution is for Congress to fix the problem. Until that happens the following coverage can be helpful:

  • Hospital Stay – Hospital Indemnity policy
  • Rehabilitation stay – Short Term Recovery Care plan

Hospital Indemnity plans pay a fixed amount (i.e. $200, $300 per day) while you are in the hospital. While Medicare will cover your stay, even when in observation status, these funds can be applied towards the costs of a rehabilitation stay as described in the article. Also, if you are on a Medicare Advantage plan you can pay your in-patient hospital copay with the benefits.

Short Term Recovery plans cover actual medical costs up to the selected maximum benefit amount, for example $200 per day. These plans have a elimination period (i.e. 0, 15 or 30 days until benefits kick in) and a maximum benefit period (such as 120, 240 or 360 days). If there is a recovery there can be a one time restoration of benefits.

If you would like additional information, please contact us at 303.495.3045 or 303.859.1709.

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