Long-term health issues can lead to significant financial problems for patients who misunderstand Medicare’s complex rules. For the most part, Medicare covers acute care services, not long-term care services, so it is important to understand how Medicare benefits apply when a condition is or becomes long term.

Most Medicare recipients don’t know the answers to these questions…and when Medicare recipients are incapacitated, their adult children may not understand the details because Medicare is completely new to them. The results can be financially devastating—one family received an unexpected hospital bill for $800,000 because they did not understand that their mother had exhausted her Medicare hospital benefit. They also didn’t understand how the Medicare hospital benefit is replenished or have additional coverage in force to help with their mother’s care. This is a rare situation but one with dire consequences.

Here’s what Medicare recipients and their families need to know about Medicare’s coverage of lengthy hospital stays and skilled nursing facility care…

Hospital Stays

The 2014 Affordable Care Act reforms that took effect prohibit most health insurance sold in the US from capping hospital benefits. But those reforms don’t apply to Medicare, which has a 150-day hospital benefit limit per benefit period—but unlimited lifetime benefit periods.

Good news: Most hospital stays do not exceed 150 days. Even so, Medicare recipients can exceed this 150-day limit even if they haven’t stayed in the hospital for that long. Reason: This 150-day benefit resets only after the patient does not use inpatient Medicare Part A services for 60 days. What that means: A series of shorter hospital stays can exhaust the benefit if the patient hasn’t gone 60 days without using Part A covered services. The good news is that a Medicare beneficiary is entitled to unlimited benefit periods as long as the benefit replenishes.

Note: Days 91 through 150 of Medicare’s hospitalization allowance are “lifetime reserve days” that do not reset once used. Example: A woman has a hospital stay lasting 117 days. Medicare covers it, but because the final 27 days of her stay exceed the 90-day mark, those 27 days are subtracted from her 150-day total benefit maximum. For the rest of her life, her Medicare hospitalization benefit resets to only 123 days per benefit period.

What to do: The best defense against overrunning Medicare’s hospitalization limit is to enroll in a Medigap plan (also called Medicare supplements) if you remain in original Medicare. All Medigap plans provide 365 more reserve days of lifetime hospitalization. Some Medicare Advantage plans offer “catastrophic hospitalization” benefits as well, so take that into consideration when considering an Advantage plan.

Skilled Nursing Care

When Medicare recipients require a nursing home stay, their adult children may learn that Medicare covers up to 100 days of care in a skilled nursing facility. What they often don’t understand is the difference between skilled services, which Medicare covers, and long-term-care ­services, which Medicare does not cover.

Long-term-care services are required when a patient needs help with activities of daily living, such as getting dressed, bathing and eating. Medicare will not cover a stay at a nursing home if it is necessary only because the patient cannot be safely left alone or he/she needs help with these activities of daily living. Medicare also won’t cover a nursing home stay if the patient is unable or unwilling to participate in skilled services, such as a very elderly patient who is too frail to take part in physical therapy. If the patient has been receiving skilled services but ­recovers to a point where those services could reasonably be provided on an outpatient basis, then Medicare will not continue to cover an inpatient stay—but it would likely cover continued at-home or outpatient therapy.

In a skilled nursing facility, patients receive care from licensed professionals in a medical setting under a doctor’s supervision—Medicare covers skilled nursing facility stays up to 100 days only if…

The patient requires “skilled services” on a regular basis. These services might include physical therapy and/or other treatment from a licensed professional care provider such as a nurse, physical therapist, speech therapist or occupational therapist.

The skilled nursing facility stay occurs immediately following a hospital stay of three or more days. This three-day hospitalization rule was suspended during the COVID pandemic, but it’s back now that the public health emergency has officially ended. To qualify, the patient’s skilled nursing stay must be for an illness or injury related to the hospital stay and the patient must have “inpatient” status at the hospital. Beware: Sometimes hospital patients are officially outpatients even though they remain in the hospital for multiple days. If your status isn’t clear, ask the hospital staff, “Am I, or is my loved one, considered an inpatient or an outpatient as far as Medicare is concerned?”

The stay might be considered outpatient if it was less than three days…was in a holding area…or was in the Emergency Department. This generally occurs when a patient is being observed to determine if an admission will meet Medicare’s inpatient criteria. Exception: Some Medicare Advantage plans do not require this three-day hospital stay.

But be aware: Under original Medicare, the maximum benefit is 100 skilled days per benefit period, but the patient must meet Medicare criteria for ongoing skilled care for any stay to continue to be covered as an inpatient. If the patient has recovered sufficiently that he no longer requires inpatient care according to Medicare criteria, he can be discharged or remain in the facility without Medicare covering the stay. This determination will be made based strictly on the patient’s health situation and not whether his family has made other care arrangements.

When this occurs, patients receive a “Notice of Medicare Non-Coverage” from the facility citing a coverage end date. Medicare recipients have the right to appeal Medicare termination decisions—the appeal instructions typically are provided on the Notice of Medicare Non-Coverage. But in practice, these appeals tend to delay the end of Medicare coverage by days, not weeks, if at all.

Patients who remain in skilled nursing facilities after Medicare coverage ends must pay for additional days out of pocket, unless the patient has long-term-care insurance or retiree medical benefits that might provide coverage.

Theoretically, Medicaid could pay long-term-care bills when Medicare will not—but to qualify for Medicaid, a patient must spend down virtually all of his assets. Medicaid eligibility typically requires that the recipient have no more than $2,000 in “countable assets.” A small number of assets are considered “non-countable” and are not included in this calculation.

Even if a patient qualifies for 100 days of skilled nursing facility care through Medicare, that doesn’t mean Medicare will cover all the costs. Up to 20 days can be fully covered, but a $200-per-day co-pay applies for days 21 through 100. Helpful: Many Medigap plans cover the co-payment. Out-of-pocket costs for skilled nursing facility care vary with Medicare Advantage plans. When a patient has Medicare Advantage coverage rather than original Medicare, the Advantage plan staff—not the facility’s health-care providers—typically determine when coverage ends.

Another potential source of confusion: A patient who recently had a skilled nursing facility stay covered by Medicare might not qualify for the full 100 days of care if he requires another stay. Readmissions within 30 days for the same condition should be covered. But the 100-day benefit resets only when the patient is so-called “facility free” for at least 60 consecutive days without using his inpatient Medicare Part A benefit to pay for either hospital or skilled nursing facility inpatient care.

What to do: Medicare recipients and their families should discuss in advance what Medicare does and does not cover…know whether there is long-term-care coverage in place and how the benefit works …and what they will do if this loved one is discharged from a hospital or skilled nursing facility yet is unable to look after himself. Don’t wait until this happens to seek a solution—events might happen too fast to make wise decisions.

Medicare Guidelines

Inpatient Hospital Care

  • Must be medically necessary and ordered by a doctor.

  • 150 days per benefit period…unlimited lifetime benefit periods.

  • Days 91 through 150 are “lifetime reserve days” that do not reset once used.

Skilled Nursing Facility

  • Must need daily skilled nursing or therapy care as ordered by a doctor.

  • 100 inpatient skilled nursing days per benefit period…unlimited lifetime benefit periods.

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