What Does Observation Status Mean?
Observation status means you are in the hospital, but your medical situation does not meet Medicare’s rules for inpatient admission. Your health care provider may need to watch you or do more tests to understand your condition. Even though you are in the hospital and you may stay overnight, Medicare considers you an outpatient.
Why Does Observation Status Matter?
Observation status affects what Medicare will pay for while you are in the hospital and after you leave the hospital. Your share of your hospital bills may be larger than if you were an inpatient. If you go to a skilled nursing facility (nursing home) after you leave the hospital, you might have to pay the full cost of your stay.
What Does This Mean for My Coverage?
- Medicare Part A does not cover outpatient services and will not pay for your observation stay.
- If you have Medicare Part B:
- The hospital will bill Medicare Part B for the services you get while you are under observation.
- You will have to pay your Medicare Part B cost-sharing (deductible, co-insurance, co-payments) for the services you get while you are in the hospital. If you have other insurance like a Medigap policy or Medicaid, it may cover these costs. You can contact your insurance provider to find out what they will cover.
- You may have to pay for medicine that you would normally take at home (like eye drops, inhalers, or medicine you take by mouth) because Medicare Part B does not cover most of these types of medicines.
- If you don't have Medicare Part B:
- The hospital will bill any other insurance you have. You can contact your insurance provider to find out what they will cover.
- If you don't have other insurance, the hospital will bill you for your hospital stay.
- Medicare does not count observation time toward the 3-day inpatient hospital stay that Medicare requires before it will cover care at a skilled nursing facility (nursing home). You can ask your doctor or discharge planner about your options for care after you leave the hospital.
- Your status may change while you are in the hospital, which can change what Medicare will cover.
Where Can I Get More Information?
- See the “Medicare & You” handbook on the Medicare website
- Call Medicare at 1-800-MEDICARE (800-633-4227); TTY users call: (877) 486-2048
- Vermont Residents:
- Call the State Health Insurance Assistance Program (SHIP) at 1-800-642-5119 or
- Call the Office of the Health Care Advocate at 1-800-917-7787