You might be familiar with how health insurance works when it comes to deductibles and copayments. For major medical plans, you typically have one deductible that applies for the whole calendar year of your coverage. In other words, you just pay it once. After that, your plan covers the cost of your medical care according to the contract.
But Medicare works differently.
Under Medicare Part A, which covers hospital and skilled nursing facility care, you can have multiple benefit periods in a single year. There’s no limit, really. And once a new benefit period starts, you’ll have to pay the Part A deductible again.
How much you pay and how often could depend on the plan you have, though. Original Medicare and Medicare Advantage may cover Part A benefits in different ways, especially in terms of cost.
Here’s what you need to know about the Medicare Part A benefit periods and how they work.
Hospital Benefit Periods for Original Medicare
Original Medicare Part A doesn’t usually have a monthly premium. Most people get this portion of Medicare for free thanks to work taxes. But while the plan itself might not cost anything, there are still costs for the care that you get under Part A.
In 2023, hospital costs under Part A include:
- A $1,600 deductible per benefit period
- $0 coinsurance for days 1-60
- $400 coinsurance per day for days 61-90
- $800 coinsurance per day for lifetime reserve days (max of 60)
- All costs after lifetime reserve days are used up
These amounts change each year. In 2024, the Part A deductible is $1,632 and the coinsurance is $408 (days 61-90) and $816 (days 91+).
It’s important to know the costs of Part A under Original Medicare because these costs reset for every benefit period that you have. And there can be multiple benefit periods in a single year.
The Medicare Part A hospital benefit period starts when you’re admitted as an inpatient at a hospital or skilled nursing facility and ends once you’ve gone 60 days in a row without inpatient care.
Let’s say you end up in the hospital for a week with pneumonia. You get admitted on November 4th and you’re discharged on November 11th. Your Part A benefit period started the day you got admitted as an inpatient (November 4th) and will run until you’ve gone 60 consecutive days without inpatient hospital care. Until that happens, any other hospital admissions you have during this time will be included in the same benefit period. That means you won’t need to pay the deductible again.
But once you’ve gone 60 days in a row without being admitted to the hospital, your Part A benefit period starts all over again. The cost sharing resets, too, and you’ll have to pay the deductible again as well.
During each benefit period, you’ll have a deductible to pay upfront before Medicare pays its portion of your care. And if you end up needing inpatient care beyond 60 days, then you’ll have to cover the per-day copayments we listed above.
To reiterate, the next hospital benefit period does not start until you’ve gone 60 consecutive days without needing inpatient care.
While you’re still in the same benefit period, you may accrue enough inpatient days to have to start paying the Part A coinsurance rates. Original Medicare will only cover 90 days of inpatient hospital care in a single benefit period. The first 60 days of that don’t require any cost sharing. Days 61 to 90 do. These rates change each year.
Starting on day 91, you’ll have to tap into what Medicare calls your “lifetime reserve days.” You only get 60 lifetime reserve days for your life. Once those get used up, you’ll pay the costs yourself if you exceed the 90-day coverage limit during a hospital benefit period.
Skilled Nursing Facility Benefit Periods
Medicare Part A also covers skilled nursing facility (SNF) care. And as with hospital admissions, SNF admissions allow for multiple benefit periods in a single year.
Costs differ for SNF care, though. In 2023, you’ll pay:
- $0 copay for days 1-20
- $200 copay per day for days 21-100
- All SNF costs for days 101+
As with the hospital benefit, these amounts change each year. In 2024, the copay for SNF care is $204 (days 21-100).
The benefit period for skilled nursing facility care starts on the day you’re admitted and ends once you’ve gone 60 days in a row without getting SNF care — same rules as hospital inpatient care.
Note that skilled nursing coverage doesn’t have lifetime reserve days. Once you hit day 101 in each benefit period, you’ll have to pay for the cost of care yourself for however long you need it.
There are also some other things you should know about how coverage works for SNF care.
Medicare will only cover skilled nursing facility care if you’ve spent three days as an inpatient at a hospital first and you have a doctor’s order for the SNF care that says it’s necessary. There are a few other requirements, but these are the basics.
Before your benefit period can even start and before Medicare will cover your SNF care, you have to have spent three days as a hospital inpatient.
This excludes what’s known as “observation status.” If you’re at a hospital but haven’t been formally admitted as an inpatient, your time won’t count towards the SNF minimum. (It also won’t count for Part A coverage, since Part A covers inpatient care.) Check with your doctors and the hospital to make sure of your status.
If you’re going to be on observation status at a hospital for more than 24 hours, the hospital should give you a notice called the Medicare Outpatient Observation Notice (MOON) describing your status and how it might impact your coverage.
But don’t leave it up to the hospital to follow through on this. If you’re at a hospital receiving care, ask if you’re being admitted as an inpatient or not. Being proactive might help you avoid surprise bills later.
Do the hospital and SNF benefit periods overlap?
Yes and no. We’ve talked about hospital and skilled nursing facility coverage as if they’re separate. But in reality, these benefits work together. Because you can’t get SNF care unless you’ve spent three days as an inpatient at a hospital first, these benefits go hand in hand.
Let’s say that during your hospital stay for pneumonia, your doctor determines that you need close observation and care as you recover from the infection. He orders treatment at a skilled nursing facility, which starts the day you’re released from the hospital (November 11th).
Your Part A benefit period started the day you were admitted to the hospital (November 4th). Because you’re already inside of a benefit period, Medicare will cover up to 100 days of SNF care while you’re in this benefit period. Once you recover from the pneumonia and decide to go home, you’ll still be inside the same benefit period until it’s been 60 days since you received SNF care.
The Part A benefit runs from the day you’re admitted to a hospital or skilled nursing facility and ends once you’ve gone 60 consecutive days without needing care from either one. During that time, you have 100 days of coverage for SNF care at your disposal. This maximum resets with each benefit period.
What if I use up all my lifetime reserve days but need more coverage?
Not sure how much medical care you’ll need in a given year? It’s a hard thing to estimate, especially as you get older and may need more care than you did before. And if you have a chronic condition, it can be tough to see that 60-day lifetime reserve cap on Medicare Part A hospital coverage. What if you need more care?
Fortunately, there are a couple different ways to handle this scenario. But you need to be proactive. Option A is to get a Medicare supplemental insurance plan. Option B is to enroll in Medicare Advantage (which we discuss in the next section).
As for Medicare supplemental insurance, also known as Medigap, it’s a supplemental policy that you can buy to help offset the costs of Original Medicare.
There are 8 different plan types, labeled by letter, and each letter type covers a set of out-of-pocket costs for Parts A and/or B. These plans are standardized in all but three states (Massachusetts, Minnesota and Wisconsin). That means that if you buy Medigap Plan G in Texas, it covers the same set of benefits as Plan G in Rhode Island or Kansas or Delaware. The only thing that differs is the cost of the plan and the company selling it.
We discuss Medigap elsewhere, but we did want to mention it here because a Medicare supplemental policy can boost your Part A coverage.
While each Medigap policy varies in what it covers, all of them cover Part A coinsurance and hospital costs up to an extra 365 days after your Medicare benefits are used up. Some of them also cover skilled nursing facility costs as well, making Medigap a good option if you want to stick with Original Medicare but want an extra safety net for potentially high Part A costs.
Medicare Advantage and Benefit Periods
We’ve been talking about Part A benefit periods under Original Medicare. But you may choose to get Medicare Advantage instead. In 2023, over 29 million people chose the private alternative to traditional Medicare, representing about 45% of the Medicare population.
These plans tend to offer broader benefits, such as coverage for things that Original Medicare doesn’t cover, like prescription drugs, dental and vision, hearing aids and more. And when it comes to Medicare Part A, there are some other potential advantages.
By law, Medicare Advantage plans have to cover the same benefits as Original Medicare. So at a base level, these private plans are going to be comparable to the benefits we’ve described above. But Advantage plans also have more flexibility in what benefits they cover as well as how they cover those benefits.
For example, you may find private Medicare plans that:
- Charge a single deductible per hospital stay instead of per benefit period;
- Cover an unlimited number of hospital stays;
- Don’t have multiple benefit periods each year; and/or
- Don’t charge per-day coinsurance.
Instead of having to pay $1,600 every time you start a new deductible period, you might just have a copay of $400 per visit, for instance, with no additional out-of-pocket costs beyond that. Advantage plans may not have the “lifetime reserve day” limit that Original Medicare does, either, which could be helpful to you if you end up needing more inpatient care than you expected.
This is not a guarantee, of course. Because private plans are sold by individual companies, coverage and cost are going to vary.
But the point is that you have options for how you get your medical care once you’re eligible for Medicare. You can choose Original Medicare or Medicare Advantage. One isn’t necessarily better than the other. It’s a matter of what makes sense to you, your healthcare needs and your budget. Consider your options carefully to find the plan that works for you.