Your Financial Future: Are You an In or Outpatient?

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By on March 2, 2017 in Retirement with 0 Comments

Nurse talking to senior female patient in hospital bed

If you’ve been admitted to a hospital and you have Medicare, it is important for you to know if you’ve been admitted as an inpatient or as an outpatient. Most of us think of being an outpatient as going into the hospital for tests, or minor procedures; that’s not always the case.

Whether you are classified as an inpatient or as an outpatient can affect how much money you will owe the hospital when the bills begin to arrive. Inpatients are covered by Medicare Part A (which most federal retirees will have), and outpatients are covered by Medicare Part B (which many federal retirees choose not to have).

Let’s assume that Joe is a federal retiree who is over the age of 65 and has chosen to enroll in Medicare Part B. Here’s what will happen:

If Joe is admitted as an inpatient, Medicare Part A will be his primary coverage and his FEHB will be his secondary coverage. It is unlikely that Joe will have any out of pocket costs, though he would be wise to check the coordination of benefits section of his FEHB plan’s brochure.

If Joe is admitted as an outpatient, Medicare Part B will be his primary coverage and his FEHB will be his secondary coverage. It is unlikely that Joe will have any out of pocket costs, though he would be wise to check the coordination of benefits section of his FEHB plan’s brochure.

So, does Joe have anything to worry about?

It seems that with Medicare and FEHB that he is fully covered and is likely to have no out-of-pocket expenses. Yet he does have something about which he should be concerned. If Joe had to go into a nursing home for Medicare covered services (i.e., skilled care), Medicare will only pay for those services if he had been an inpatient in a hospital for at least three days within the previous thirty days. If all or part of his stay had been classified as outpatient, he might not meet the three day requirement and would be on the hook for the nursing home costs. Of course Joe would want to check his FEHB plan brochure to see if his plan covers any skilled care.

Now let’s take a look at Moe, a federal retiree who is over the age of 65 and has chosen not to enroll in Medicare Part B. Here’s what will happen:

If Moe is admitted as an inpatient, Medicare Part A will be his primary coverage and his FEHB will be his secondary coverage. It is unlikely that Moe will have any out of pocket costs, though he would be wise to check the coordination of benefits section of his FEHB plan’s brochure.

If Moe is admitted as an outpatient, his FEHB will cover his outpatient stay. Moe will have to meet deductibles and pay co-pays as per his FEHB plan’s rules. Because different FEHB plans have different rules for those who do not have Medicare Part B, Moe would be wise to check the coordination of benefits section of his FEHB plan’s brochure.

Moe also has to be concerned about the Medicare rules on skilled care services. Like Joe, if Moe had to go into a nursing home for Medicare covered services (i.e., skilled care), Medicare will only pay for those services if he had been an inpatient in a hospital for at least three days within the previous thirty days. If all or part of his stay had been classified as outpatient, he might not meet the three day requirement and would be on the hook for the nursing home costs. Of course Moe would want to check his FEHB plan brochure to see if his plan covers any skilled care.

How does Medicare define inpatient and outpatient? The following three paragraphs are taken verbatim from Medicare Publication 11435, which can be found on the Medicare website.

You’re an inpatient starting when you’re formally admitted to a hospital with a doctor’s order. The day before you’re discharged is your last inpatient day.

You’re an outpatient if you’re getting emergency department services, observation services, outpatient surgery, lab tests, or X-rays, or any other hospital services and the doctor hasn’t written an order to admit you to a hospital as an inpatient. In these cases, you’re an outpatient even if you spend the night at the hospital.

Note: Observation services are hospital outpatient services given to help the  doctor decide if the patient needs to be admitted as an inpatient or can be discharged. Observation services may be given in the emergency department or another area of the hospital.

Medicare Publication 11435 also gives several helpful examples of what would be considered inpatient or outpatient services. If you’re a retiree over the age of 65 and are admitted to the hospital – ask them whether you are being admitted as an inpatient or an outpatient.

I would like to thank the New York State Chapter of NARFE for taking a look at this article before publication. If you’re not a member of NARFE, consider joining; each chapter has a “service officer” that can assist you with questions and other issues you might have. I’ve been a NARFE member for 20 years.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

© 2019 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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