If you’re receiving care at the hospital, you may be itching to get out and back home as soon as you can. Most people don’t want long hospital stays, as they can be inconvenient and expensive rather quickly. Having coverage through Medicare can help, but only to a certain extent. Original Medicare pays coinsurance for up to 90 days and after that a “lifetime reserve” coinsurance kicks in. But what is this coinsurance, and how does it work?
Original Medicare inpatient coverage has a deductible for days one to 60 and a daily coinsurance for days 61 to 90, which both change each year. These days are counted per benefit period, so once you stop receiving care for 60 days or more, the counter resets and you’ll have to pay the deductible again. For most people, 60 days is more than enough time since the average hospital stay tends to last about 5.4 days. But not everyone’s inpatient stay will be so brief. This is where lifetime reserve days come in. If you have an extra-long stay at the hospital, the reserve days help cover a limited number of days. How limited? Everyone is given 60 lifetime reserve days.
The coinsurance for the lifetime reserve days is updated each year alongside the other costs of Original Medicare. In 2023, the Part A inpatient deductible is $1,600 (per benefit period) and the coinsurance for days 61 to 90 is $400 per day (regardless of benefit period). The coinsurance for the lifetime reserve days is $800 per day.
So, let’s say you’re in the hospital for 120 days. For days one to 60, you’ll pay out-of-pocket until you meet the $1,600 deductible. For days 61 to 90, you’ll pay $400 daily or $12,000 total. Finally, for the last 30 days (91 to 120), you’ll pay $800 daily or $24,000 total. Together, the total cost would be $37,600.
That may sound like a lot of money, but keep in mind, it’s still potentially less than what you could pay without coverage. The average cost per day for inpatient care for a hospital is roughly $2,873. Since the hospital will usually at least want to recoup their costs, let’s use it as an estimate for consumer costs. With that in mind, this comes out to $344,760 total without coverage. It also helps to simplify your costs. Instead of being billed separately for different aspects of care, many individual costs are covered by your lump payment of lifetime reserve coinsurance.
These reserve days are called “lifetime” for a reason. You’ll only ever have 60 days. This doesn’t mean 60 days per benefit period or 60 days per year. You’ll have 60 reserve days for your lifetime. Once these days are used up, you’ll be covering the full costs of care. The good news is most people won’t need all their reserve days, seeing as the average hospital stay is 5.4 days. But things can get tricky if you have a complex health concern with elongated inpatient stays. Here’s the example we used in How Medicare Benefit Periods Work. For this example, remember that a new benefit period begins only if you go 60 days without receiving care.
First, you have your 120-day stay at the hospital from our costs example above, using 30 reserve days. The next year, you have a related issue and need 120 more days at a skilled nursing facility to recover. You pay the deductible and coinsurance for days one through 90 again and use the last of your 30 reserve days for days 91 through 120. You recover and return home, only to slip and hurt yourself the next month, before 60 days without care is up. This means that when you’re in the hospital, you’re still in the same benefit period. Since you’re still in the same benefit period, you won’t have to pay the deductible again. Since you’re out of lifetime reserve days, you’ll be responsible for the full costs after day 90.
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We don’t want this to make you apprehensive regarding your lifetime reserve days. Keep in mind, the reserve days are there to cover people who need extra-long hospital or inpatient care stays. Most people will be out of the hospital recovering before they even get to the phase where they’re paying the daily coinsurance. But it’s comforting to know that if you do have an issue that requires an extra-long hospital stay, there’s something there to help cover some of the costs of that care.
To help with some of these costs, you can also look into Medicare Supplements if you’re enrolled in Original Medicare, a Medicare Advantage plan, or a hospital indemnity plan, either of which may help with out-of-pocket costs that relate to a longer inpatient stay!