Making Sense of the Medicare Benefit Period

The Four Rules You Need to Know

Fact checked by Angela Underwood

Medicare Part A has terms for benefit periods that not only affect how much you will pay for care in the hospital or in a skilled nursing facility, but how long you will be covered. Unfortunately, understanding how these benefit periods work is not always clear cut.

What Is the Medicare Benefit Period?

The Medicare benefit period for Part A is the period of time your deductible will cover your care in a hospital or skilled nursing facility (SNF). In 2023, the Part A deductible is $1,600, increasing to 1,632 in 2024. Any healthcare provider fees, however, will be charged to Medicare Part B and are not included as part of the Part A benefit.

Most health insurance plans have you pay a deductible once a year. With Medicare, you could face multiple Part A deductibles over the course of the year depending on your need for hospital care.

It is important to understand that the Medicare benefit period applies to inpatient hospital stays only. Staying overnight or even several days in a hospital does not necessarily qualify as an inpatient stay.

You could be placed “under observation” during that time, and Medicare Part B (not Part A) would be used for coverage. Be sure to ask your healthcare provider what orders are in place whenever you stay in the hospital.

Unlike Part A, Medicare Part B does not have benefit periods. With the exception of certain preventive care tests, you would be expected to pay 20% of all Part B costs. Also, any days you are in the hospital under observation do not count toward your Medicare Part A benefit period.

In order to understand the Medicare benefit, you need to understand the following four rules.

60 Days Starting With a Hospital Stay

1) Your Medicare benefit period starts the day you are hospitalized as an inpatient and ends once you have been out of the hospital or a skilled nursing facility for 60 days.

It is possible to be hospitalized multiple times within a single benefit period. It does not have to be for the same medical reason. You would not be subjected to additional deductibles for any readmissions during that time.

Hospitals, however, can face financial penalties if you require readmission for the same medical problem within 30 days. The burden is on hospitals to make sure you are stable enough for transfer to a skilled nursing facility or discharge to home.

The Hospital Readmissions Reduction Program specifically monitors stays for chronic obstructive pulmonary disease (COPD), coronary artery bypass graft (CABG) surgery, heart failure, acute myocardial infarctions, pneumonia, total hip replacements, and total knee replacements.

Any readmissions for these reasons could result in Medicare cutting payments to those hospitals by as much as 3%.

Example 1

You are admitted to the hospital on January 1 (day 1) and are discharged to home on January 8 (day 8). You are hospitalized again on January 23 (day 23). You were out of the hospital for 15 days.

You would not have to pay another Part A deductible because you are still within the benefit period that started on January 1. The day you are re-hospitalized continues where your previous Medicare benefit period left off. You are now on day 9.

Example 2

You are admitted to the hospital on January 1 (day 1) and are discharged to home on January 8 (day 8). You are hospitalized again on March 19 (day 78). You were out of the hospital for 70 days.

You would have to pay another deductible because you are past the Medicare benefit period that started on January 1. You do not start where your previous Medicare benefit period left off. You are now on day 1.

60 Days of Care Per Deductible

2) Your Part A deductible covers 60 days of hospital care.

After 60 inpatient hospital days, you will pay more than your Part A deductible. In 2023, you will pay a $400 coinsurance for each hospital day from 61 to 90 within a given benefit period. In 2024, the coinsurance increases to $408.

Example

You are admitted to the hospital on February 1 (day 1) and are discharged home on April 11 (day 70). The Part A deductible for 2024, $1,632, covers the first 60 days of your inpatient hospital stay.

You will also pay $4,080 ($408 times 10 days) as coinsurance for days 61 to 70. Your Part A costs for this benefit period total $5,712 ($1,632 plus $4,080).

60 Lifetime Reserve Days

3) Medicare offers you 60 lifetime reserve days to extend your Medicare benefit period.

Any hospital stays lasting longer than 91 days will require use of lifetime reserve days. These reserve days cost $800 per hospital day in 2023 ($816 in 2024). Medicare only allows you 60 lifetime reserve days total.

By definition, these are the only reserve days Medicare will give you in your lifetime. They are not renewed each year. After you exhaust your lifetime reserve days, you will pay all out-of-pocket costs.

There is one way to accrue additional lifetime reserve days. That is with a Medicare Supplement Plan, also known as Medigap. These plans are not part of the official Medicare program, but are standardized by the federal government.

Although they do not directly cover medical services, these plans help to pay down expenses that Medicare leaves on the table, including deductibles, coinsurance, copayments, and more.

All Medigap plans offer you an additional 365 lifetime reserve days. Some policies can also pay all or part of your Part A deductible.

Example

You are admitted to the hospital on March 1 (day 1) and are discharged on June 8 (day 100). The Part A deductible for 2024, $1,632, covers the first 60 days of your inpatient hospital stay. You will also pay $12,240 ($408 times 30 days) as coinsurance for days 61 to 90.

In addition, you will pay $8,160 ($816 x 10) as coinsurance for 10 lifetime reserve days to cover days 91 to 100. Your Part A costs for this benefit period in 2024 total $22,032 ($1,632 plus $12,240 plus $8,160). You only have 50 lifetime reserve days remaining to use as long as you have Medicare.

Skilled Nursing Care Within 30 Days

4) You must enter a Medicare-certified skilled nursing facility within 30 days after leaving the hospital.

In order for Medicare to pay for care in a skilled nursing facility, you first have to be hospitalized as an inpatient. That inpatient stay must be at least three days long, not including the day of transfer to the nursing facility.

However, Medicare could still pay for care in a skilled nursing facility if you come from home rather than from a hospital. This is the case if you are within an active Medicare benefit period.

By definition, a Medicare benefit begins with an inpatient hospital stay. As long as that stay was at least three days long, you qualify for Medicare-covered placement. An exception to the three-day rule may apply if your healthcare provider participates in a program approved for a Skilled Nursing Facility 3-Day Rule Waiver.

The COVID-19 Public Health Emergency

During the public health emergency (PHE), the three-day skilled nursing facility rule was waived. Once, the PHE ended on May 11, 2023, the rule took affect again.

The trick is that you would have to require skilled nursing care daily or skilled therapy services at least five days per week and be placed in the SNF within 30 days of your hospital discharge.

Coinsurance for your stay in a skilled nursing facility is different than your inpatient hospital stay, though both are covered by Part A. The Part A deductible covers your first 20 days in an SNF. Days 21 to 100 require a coinsurance of $200 per day in 2023 ($204 in 2024) and you will pay full expenses out of pocket for any subsequent days.

Medicare does not offer lifetime reserve days for SNF care, although many Medigap plans do offer partial or full payment toward your SNF coinsurance costs.

Example 1

You are admitted to the hospital on April 1 (day 1). You are discharged to home on April 8 (day 8). You do not recover well at home, and based on your medical needs, your healthcare provider recommends placement in a skilled nursing facility on May 1. You have been out of the hospital for 23 days (less than 30 days), so Medicare will cover your stay.

Example 2

You are admitted to the hospital on May 1 (day 1). You are discharged to home on May 8 (day 8). You do not recover well at home, and your healthcare provider recommends placement in a skilled nursing facility on June 10. You have been out of the hospital for 33 days (more than 30 days), so Medicare will not cover your stay.

Example 3

You are admitted to the hospital on June 1, (day 1). You are transferred to a skilled nursing facility on June 8 (day 8). June 8 counts as day 1 for your SNF coverage. You are discharged from the SNF on July 8 (day 30 of SNF coverage).

Your Part A deductible for 2024, $1,632, covers your hospital stay and the first 20 days of your SNF stay. You will also pay $2,040 ($204 times 10 days) as coinsurance for days 21 to 30. Your Part A costs for this benefit period total $3,6720 ($1,632 plus $2,040).

Summary

Medicare benefit periods are not always so straightforward. Understanding the 60-60-60-30 rules explained in this article can help you make sense of them.

Know how much you are expected to pay and how much Medicare will cover. It may encourage you to consider enrolling in a Medigap plan for healthcare savings down the road.

Read the original article on Verywell Health.