Older adults with Medicare Advantage plans now make up almost half of all Medicare inpatient hospital days, according to recent data released by the Kaiser Family Foundation (KFF).

The data in the KFF study examined the growth of Medicare Advantage as a share of hospital inpatient days between 2015 and 2022 using data from hospital cost reports submitted to the Centers for Medicare and Medicaid Services (CMS). KFF’s findings align with its 2024 update, which found that 54% of the eligible Medicare population is enrolled in a Medicare Advantage plan.

Since the Medicare Modernization Act of 2003, Medicare Advantage (Part C) plans have become popular because they’re provided by private insurers who usually create “all-in-one” insurance coverage bundles that have little to no monthly premiums. These plans include Medicare-covered benefits, like doctor visits, hospital stays, and prescription drugs, and services original Medicare (Parts A and B) doesn’t cover, like dental, vision, and hearing.

But the plans can also have high deductibles and require pre-authorization for inpatient hospital stays.

“Even though a $0 premium is attractive when signing up for Medicare, you should consider total cost of care with the cost of insurance in evaluating what your total out-of-pocket expenses will be for the year,” says Erin Bueltel, Director of Product Solutions at Wellabe.

Hospital costs with Medicare Advantage plans may also be higher if you’re admitted under “observation status” rather than as an inpatient. Medicare Advantage copays vary depending on whether you’re inpatient versus observation, Bueltel says. Medicare observation billing usually has higher copays and coinsurance than inpatient services.

“Just because you’re in the hospital doesn’t mean you’re considered inpatient. You should review your Medicare Advantage plan documents to determine if observation or outpatient copays are different than inpatient stays,” she says.

Pairing Hospital Indemnity insurance coverage with a Medicare Advantage plan can help decrease these unexpected costs. Hospital Indemnity insurance gives you cash to cover your out-of-pocket expenses from a hospital stay. With these plans, you set the number of days you want coverage and the cash benefit amount per day of coverage.

“You can tailor your Hospital Indemnity plan to meet your exact needs and limit how much you spend for your medical care,” Bueltel says.

Hospital Indemnity riders provide optional coverage for things like ambulance and urgent care services, outpatient surgery, outpatient therapy, chiropractic services, skilled nursing services, and care for a cancer diagnosis.

The annual open enrollment period for Medicare is Oct. 15 through Dec. 7. During this time, you can switch from Medicare Advantage to original Medicare and add supplemental insurance like Hospital Indemnity coverage.

Switching to original Medicare with a Medicare Supplement plan instead of Medicare Advantage could save you money on inpatient hospital stays in the long run, Bueltel says. Medicare Supplement insurance helps pay for costs not covered by original Medicare coverage, such as deductibles, copays, and coinsurance. Medicare Supplement insurance cannot be paired with Medicare Advantage plans, but it can be grouped with Hospital Indemnity coverage.

“While $1,200¹ a year for Medicare Supplement may seem like a lot, you could be spending more in total if you were to be hospitalized due to having to pay copays for care,” Bueltel says.

1. Average annualized premium on Medicare Supplement insurance Plan N, underwritten by Wellabe companies Medico® Insurance Company, Medico® Corp Life Insurance Company, or Medico® Life and Health Insurance Company.

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