5 Critical Facts About Inpatient Hospitalization Costs Under Medicare, Medicare Supplement (also known Medigap), and Medicare Advantage

April 4th, 2025

If you're turning 65 or already enrolled in Medicare, it's essential to understand how hospital stays are covered — and more importantly, what costs you could be responsible for. Many seniors are shocked by unexpected bills after a hospital visit, especially when they don’t realize the difference between Original Medicare, Medicare Supplement (Medigap), and Medicare Advantage plans.

Here are 5 important facts to help you avoid surprises when it comes to Medicare inpatient hospitalization coverage.

1. Inpatient vs. Observation Status – It Can Make or Break Your Bill

Just because you stay overnight in a hospital doesn't mean you're considered an inpatient.

• Observation status is billed under Medicare Part B, not Part A.
• Observation status can result in higher out-of-pocket costs.
• This status also does not count toward the required 3-day inpatient stay for skilled nursing facility (SNF) coverage.

Medicare Advantage and Medigap policies follow similar rules but may offer different levels of financial protection. If Medicare doesn’t classify your stay as inpatient, your supplemental plan may not pay.

Pro Tip: Always ask, “Am I admitted as an inpatient or under observation?”

2. Hospitalization Costs Vary Widely Between Medicare, Medigap & Medicare Advantage

Here’s what you’ll pay in 2025 under each option:

✅ Original Medicare:

• Part A Deductible: $1,676 per benefit period
• Days 1–60: $0 (after deductible)
• Days 61–90: $419/day
• Days 91+: $838/day ( 60 lifetime reserve days)

✅ Medicare Supplement (Medigap):

• Most plans (like Plan G and Plan N) cover:
• 100% of hospital coinsurance
• 365 extra hospital days after Medicare benefits are used up
• The Part A deductible (depending on plan)

✅ Medicare Advantage:

• Plans often charge daily hospital copays, such as $300 per day for the first 5-8 days
• Yearly Maximum Out-of-Pocket (MOOP) limits up to $9,900
• May offer lower monthly premiums, but higher costs during hospitalization

3. Medicare Advantage Plans Often Require Preauthorization for Hospital Stays

Unlike Original Medicare, which allows hospitalization without prior approval, Medicare Advantage plans typically require preauthorization for non-emergency admissions.

• Failure to obtain approval may result in denied claims
• You could be on the hook for the full cost of your hospital stay

💡 Always check with your Medicare Advantage provider before elective admissions.

4. Hospital Choice is More Flexible Under Original Medicare + Medigap

If you have Original Medicare, you can go to any hospital in the U.S. that accepts Medicare.

With Medicare Advantage:

• You're usually restricted to a network of hospitals
• Out-of-network hospital stays may not be covered (except in emergencies)
• Prior authorizations and referrals may be required

With a Medigap policy, you can use any Medicare-approved hospital — no networks, no referrals.

5. Out-of-Pocket Protection Works Differently

Original Medicare + Medigap:

• Medigap plans cap your costs by covering deductibles and coinsurance
• There is no annual MOOP, but costs are predictable with a good plan

Medicare Advantage:

• Includes a built-in MOOP limit, often $4,000–$8,850
• After hitting this limit, the plan covers 100% of costs
• However, it’s possible to reach this cap quickly if hospitalized multiple times in a year

Final Thoughts: Don’t Risk a Surprise Bill – Get the Right Medicare Advice

Understanding how hospitalization is handled under Medicare, Medigap, and Medicare Advantage can save you thousands. The wrong choice could leave you with unexpected expenses — especially during a hospital stay.

Before enrolling or making plan changes, speak to a licensed Medicare expert who can guide you through your options.

👉 Contact Kim & Co Agency – your local Medicare specialists.
Visit www.kimcoagency.com to schedule a no-cost Medicare review and avoid costly mistakes.