How Do I Know if I’ve Been Assigned Observation Status or Inpatient Status?

Hospital observation services are short-term outpatient services received when you are in the hospital for monitoring purposes and/or to determine whether you should be admitted as an inpatient. It is important to know that if you are receiving observation services (sometimes referred to as under observation status), you have not been formally admitted to the hospital as an inpatient, even if you are given a room or stay overnight.

This makes it difficult for you to tell if you’re an inpatient or an observation patient. You can’t assume that, just because you’re in a regular hospital room or in a hospital bed rather than on a gurney, you’re an inpatient. Your doctor or attending medical staff would be able to inform you.

Nor can you assume since you’ve been in the hospital for a few days you’re an inpatient. Although observation is intended for short periods of time, it doesn’t always work that way. For example, you go to the emergency room for stomach pain, after a diagnostic blood tests and or imaging/x-rays, there is no conclusive diagnosis and the doctor places you into observation for an overnight stay.

Most private insurance plans do not cover observation. That is why it is important for you to ask the doctor or medical staff if you are being placed in observation or admitted as an inpatient.

However, there is a supplemental plan that can help pay for hospital observation. Contact me for more information.

Amy Penna, in her article “Small business health insurance: The state of the market and what small businesses are doing about it”, states:

“You don’t have to look hard to find evidence that group health insurance has become prohibitively expensive for small businesses with fewer than 50 full-time employees. As we’ve reported in the past, annual group health insurance premiums in 2017 for small businesses were $6,486 for single coverage and $17,615 for family coverage. 

Additionally, traditional group health benefits come with other costs that can stretch a company’s budget. The cost to administer group health benefits adds up to over $12,000 each year. With figures like these, it’s no wonder that the number of small businesses offering group health insurance has declined by 25 percent since 2010. Currently, less than half of small businesses offer any kind of health insurance to their workers.”  

Many small businesses would like to offer health insurance benefits but finding traditional group insurance is too expensive. There are alternatives solutions such as a taxable wage increase or tax-free personalized benefits (QSEHRA) and other options that benefit both the employer and the employee in these ways:

• The health insurance plan belongs to the employee and, in the event, the employee leaves employment, they are not without health insurance nor are they subject to the high cost of COBRA.
• The employee has more options to customize their health insurance to fit their needs and budget.
• The employer is not involved with the annual task of reviewing health insurance plan benefits. As one employer recently stated, “I can be out of the business of health insurance and not feel pressured on making the right plan options for my employees. I have also been the person they come to when they are not happy with their insurance. It is a great relief not to have to deal with those issues.”

The Taxable Wage Increase method increases employee’s wages so they can afford to purchase a health plan. On the company side, business owners don’t have to worry about playing middleman between the insurance company and their employees. On the other hand, the employee pays income tax on the increased wages. However, the premium can be lower than that of a group plan premium so the employee still comes out financially ahead and they have a health insurance plan customized to their needs.

The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) also known as a small business HRA, is a company-funded, tax-free health benefit used to reimburse employees for personal health care expenses. The business must establish legal QSEHRA plan documents, including a summary plan description to comply with IRS and Department of Labor requirements.