When getting care at a hospital, your observation status can affect your Medicare coverage and how much you pay for X-rays, lab tests and more.

Here’s a breakdown of the status types and how they impact Medicare.

Types of observation status on Medicare

Inpatient—covered by Medicare Part A and Part B

Your status as an inpatient begins when you're formally admitted to a hospital with a doctor's order. Qualifying to be an inpatient typically relies on 2 things—your doctor’s judgment and your need for medically necessary hospital care.1 Generally speaking, this is when you’re expected to need 2 or more midnights of necessary care.

Part A helps cover inpatient hospital services and Part B helps cover most of your doctors’ services.

Here’s what you generally pay under Original Medicare as a hospital inpatient:2

  • Part A—normally, a one-time deductible for all of your hospital services for the first 60 days you’re in a hospital
  • Part B—20% of the Medicare-approved amount for doctor services after paying the Part B deductible

Note: Your last day as an inpatient is the day before you’re discharged.

Outpatient—covered by Medicare Part B

If a doctor hasn't written an order to admit you as an inpatient, you’re considered an outpatient. This includes when you’re getting emergency room services, observation services, outpatient surgery, lab tests, X-rays and more. You can even be considered an outpatient if you stay overnight in a regular hospital bed.3

However, if you're getting outpatient observation services for more than 24 hours, the hospital must give you a Medicare Outpatient Observation Notice, opens new window (MOON).4 The MOON will tell you why you’re an outpatient, instead of an inpatient, and how it can affect what you pay for during and after your stay. You can also request a MOON at any time before you’ve been in the hospital for 24 hours.

Here’s what you generally pay as an outpatient under Original Medicare:

  • Part B—generally, a copayment for each outpatient hospital service (amount may vary by service). You also pay 20% of the Medicare-approved amount after you pay the Part B deductible.

Note: The copayment for a single outpatient hospital service can’t be more than the inpatient hospital deductible. However, your total copayment for all outpatient services may be more than the inpatient hospital deductible.

Hospital observation status and medication costs

Any prescription and over-the-counter drugs you receive in an outpatient setting (like an emergency room) aren’t covered by Part B. But if you have Medicare Part D (prescription drug plan), they may be covered in certain circumstances. If the drugs are covered, you’ll probably need to pay out of pocket and submit a claim to your drug plan for a refund.

Your status matters

From Medicare coverage to what you pay out of pocket, it’s important to know your observation status. If you’re ever unclear, ask the doctor or hospital staff for answers.

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  1. “Inpatient or Outpatient Hospital Status Affects Your Costs,” Medicare.gov, last accessed June 9, 2022, https://www.medicare.gov/what-medicare-covers/what-part-a-covers/inpatient-or-outpatient-hospital-status.
  2. “What Does Inpatient Versus Outpatient Mean for Medicare?” Medicare.com, last accessed June 9, 2022, https://medicare.com/resources/inpatient-vs-outpatient/#:~:text=According%20to%20Medicare.gov%2C%20being%20given%20an%20inpatient%20versus,and%20whether%20inpatient%20hospital%20care%20is%20medically%20necessary.
  3. “Inpatient or Outpatient Hospital Status Affects Your Costs.”
  4. “Are You a Hospital Inpatient or Outpatient?”