Here’s an interesting question: The last time you were admitted to the hospital, were you admitted to the hospital as in inpatient?
“Kirk, you’re crazy as a loon,” you might respond, “of course I was an inpatient the last time I was an inpatient. What else would I be?”
But that wasn’t my question. You were admitted, given. But were you admitted as an inpatient?
“I was,” you say, “and I have a plastic wristband to prove it. They kept me for several days, poked my arm for blood a bunch of times, stuck these monitors on my skin with some kind of super-glue, and pumped my poor body full of drugs. That’s about as in-patient as you can get, right?”
As Johnny might have said in the old days, “wrong again, antibiotic-breath”. You can be admitted to the hospital as an “in-patient”, or you can be admitted “for observation”.
And you respond, “what difference does that make, as long as they don’t kill me? Either way, Medicare paid the whole thing”.
Actually, it can make a huge difference. You might call it (since I’ve already started on a theme of old TV shows) a $64,000 question.
When it makes a difference, is when you go from the hospital, to a nursing home. And I’m making a couple of assumptions here. First, that you’re eligible for Medicare. Second, that you don’t qualify for Medicaid. Remember, Medicare is medical coverage you paid for, through long years of working and paying the Medicare tax. Medicaid, by contrast, is a program for people without much money.
Here’s the problem: Normally, Medicare doesn’t pay for long-term care. There is one exception—if you are moving from being a hospital in-patient directly into a nursing home, Medicare will pay for the nursing home. There are some restrictions, namely that you have to be rehabilitating (not just hanging out), you have to have been in the hospital at least three days before that, and there is a co-pay requirement after 20 days. After 100 days, Medicare won’t pay it any more. But by then, hopefully, you have worked your way back home or, at least, into a lower-cost assisted living home.
So the key here is, you have to have been an in-patient, not just someone admitted for observation, for at least three days. You could have spent weeks in the hospital for observation, and it wouldn’t count. So when they discharged you to the nursing home, Medicare wouldn’t pay for that nursing home.
Which is a huge problem if you don’t qualify for Medicaid, and most people don’t. Now you have to pay that nursing home cost out of pocket.
I called this a $64,000 question. That can be, quite literally, the cost of that 100 days that Medicare won’t pay. In fact, depending on the facility you’re sent to, the cost could easily run over $100,000.
What if you don’t have $100,000? Then you owe a lot of money to the nursing home. So let’s imagine you have just a little bit of assets, but too much to qualify for Medicaid. For instance, you have a piece of undeveloped land out in the bush somewhere, or more than $2,000 in your account at the end of the month. You now get hit with a huge, crushing debt, which puts your finances in Jeopardy (sorry, I just had to get one more classic reference in there to meet my quota).
So the next time you’re being checked into the hospital, ask them whether you’re being admitted as an in-patient, or for observation. Because $100,000 is a lot of Tic Tac Dough.
Kenneth Kirk is an estate planning lawyer. Nothing in this article should be taken as legal advice for a specific situation; for specific advice you should consult a professional who can take all the facts into account. After all, this stuff takes Concentration.