ArcaMax

Dear Toni,

My husband recently fell from a ladder, shattered his hip and broke his right leg. After having emergency surgery, Jim is having a stay in a skilled nursing facility for his rehab to learn how to walk on his repaired hip.

A friend recently had a skilled nursing stay and was billed more than expected because she did not have the right amount of time as an inpatient during her preceding hospital stay. I cannot remember the specifics about whether Medicare or Jim and I have to pay for a skilled nursing stay, which was discussed in a Toni Says Medicare article.

Please explain what I should be aware of for Jim’s skilled nursing stay. Thanks so much, Toni.

—Terry from Tulsa, Okla.

Hi Terry:

The Medicare skilled nursing qualification rule is explained on page 28 of the 2026 Medicare & You handbook in the section headed “Am I an inpatient or outpatient?” One must learn that a stay in the hospital does not always mean you are an inpatient and that you qualify for Medicare Part A skilled nursing facility care. If not, you may have to pay 100% out of your own pocket.

The Medicare Outpatient Observation Notice (MOON) went into effect a few years ago and applies to those with an Original Medicare hospital stay. It does not apply to those with Medicare Advantage plans.

The MOON rule is explained in more detail in the Medicare handbook, where it says, “Whether you’re an inpatient or an outpatient affects how much you pay for hospital services and if you qualify for Part A skilled nursing facility care.” Staying overnight in a hospital doesn’t always mean you’re an inpatient. You only become an inpatient when a hospital formally admits you as an inpatient, after a doctor orders it. You’re still an outpatient if you haven’t been formally admitted as an inpatient, even if you’re getting emergency department services, observation services, outpatient surgery, lab tests, or X-rays.

Important! In the Medicare handbook, it states, “Each day you have to stay, you or your caregiver should always ask the hospital and/or your doctor, a hospital social worker, or a patient advocate if you’re an inpatient or an outpatient.” Terry, I advise my clients to do this every day during your, your husband’s or a family member’s hospital stay, since it affects what you pay and can affect whether you’ll qualify for Part A coverage in a skilled nursing facility.

Terry, be sure that you, Jim, or any family members who are on Original Medicare and having a hospital stay are provided the MOON (Medicare Outpatient Observation Notice) in a written form that is signed and dated, with an oral explanation from the facility no later than 36 hours from the time the Medicare patient begins receiving outpatient observation services. This time limit is considered the two-midnight- stay observation policy.

Remember that the first two days of a hospital stay are considered outpatient with a MOON. Some may have to pay 100% of their skilled nursing/rehab facility stay if they have not been formally admitted as an inpatient with at least a three-day hospital stay with a discharge on the fourth day.

Below is what you, your family members or caregivers need to know when having a hospital stay:

1. Remember, the MOON rule applies to those on Original Medicare and not Medicare Advantage plans. MA Plans have their own rules on inpatient/outpatient services and qualifying for a skilled nursing stay.

2. Discuss the hospital procedure with your physician/surgeon regarding whether this will be an inpatient or outpatient stay.

3. You or a family member should ask the hospital every day if you or your loved one is an outpatient or an inpatient that has been formally admitted.

Chapter 2 of Toni’s Medicare Survival Guide Advanced edition explains Medicare’s MOON rule and skilled nursing three-day rule in easy-to-understand terms. Remember, with Medicare, what you don’t know WILL hurt you!

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Toni King is an author and columnist on Medicare, Social Security and long-term care issues. She has spent nearly 30 years as a top sales leader in the field. If you have a Medicare question, email info@tonisays.com or call 832-519-8664. Sign up for the Toni Says newsletter at www.tonisays.com to keep up to date on Medicare changes.

©2025 Toni King. Distributed by Tribune Content Agency, LLC.

Copyright 2025 Toni King, Distributed by Counterpoint Media