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As Insurers End COVID-19 Grace Period, Patients Can Expect Hospital Bills

Two patients wearing face masks in the hospital.

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Key Takeaways

  • Based on an analysis of data on flu hospitalizations among elderly people in 2018, researchers estimate that if insurers eliminate cost-sharing waivers for COVID-19 treatment altogether, some patients could end up paying as much as $2,500 or more out of pocket.
  • The researchers argue that federal policymakers should intervene on behalf of patients by requiring insurance companies to offer cost-sharing waivers through the end of the pandemic.
  • Under current federal law, insurance companies must waive cost-sharing for COVID-19 testing, but not for COVID-19 treatment. 

Thousands of people have been hospitalized for COVID-19 in the past year, and generally, most patients haven't had to pay out of pocket for these costs. Government programs and insurance companies have largely borne the brunt of the cost. But that might be changing.

Researchers at the University of Michigan and Boston University suggest in a new study that a subset of people hospitalized for severe COVID-19 in 2021 may owe almost $1,000 or more in out-of-pocket expenses as public and private health insurance companies begin to phase out cost-sharing waivers.

Put simply, the waivers enable insured patients to receive medical care for SARS-CoV-2 infection or related complications at no additional cost to them in the form of copays, deductibles, or coinsurance. Issued en masse at the beginning of the pandemic as companies scrambled to adjust their policies to the circumstances, many such waivers are nearing or have already passed their original expiry date.

The researchers, Kao-Ping Chua, MD, PhD, assistant professor of pediatrics at the University of Michigan Medical School, and Rena Conti, PhD, associate professor of markets, public policy, and law at Boston University’s Questrom School of Business, argue that federal policymakers should pass legislation preventing the waivers from being entirely retired.

It “makes absolutely no sense” to saddle patients with the oft-sky-high costs of inpatient treatment for a severe respiratory disease that has already claimed more than 500,000 lives nationwide, Chua tells Verywell. 

“Cost-sharing is potentially justified if it decreases use of low-value, unnecessary health care," Chua says. "But COVID-19 hospitalizations are not low-value care—they are life-saving care. We should not penalize people for getting sick."

In addition, he says, cost-sharing could potentially hurt patient outcomes. 

“The last thing we need is to have sick people avoid the hospital because they are afraid of the costs," he says. "There is also accumulating evidence that recovery from COVID-19 hospitalizations can take months, meaning many patients cannot work. Adding a hospitalization bill would only exacerbate financial stress." Their February study was published in the American Journal of Preventive Medicine

What This Means For You

Depending on your insurer and plan, you could potentially be on the hook for hundreds or thousands of dollars in copays, deductibles, and coinsurance if you or a family member require hospitalization for COVID-19. If you're not insured, your costs may be covered by the federal government.

Estimating COVID-19 Costs by Analyzing Flu Statistics 

In order to come to these estimates, the researchers analyzed the worst flu season on record since the 2009 Swine Flu pandemic. While it’s no match for COVID-19, the seasonal flu hit the U.S. particularly hard in 2018.

Older adults constituted the majority of the worst cases. Over the course of that year, the nation recorded 14,585 influenza-related hospitalizations in people who were 65 or older and on a Medicare Advantage plan, a Medicare plan offered by a private insurance company. Nearly 40% of people who are 65 or older are on a Medicare Advantage plan.

With the pandemic in full swing, Chua and Conti received funding from the National Institutes of Health to conduct an analysis of this data for the purposes of calculating the average cost of a serious respiratory illness and its treatment for elderly individuals and families. The central analogy is approximate rather than an exact one—COVID-19, after all, is taking a far greater toll on the country and the world than even the most virulent strain of influenza.

They found that the flu patients were hospitalized for an average of six days and were charged an average of $987 in out-of-pocket fees—the total sum of copays, deductibles, and coinsurance.

That number increased with the length of stay and intensity of treatment. In other words, patients who spent more time in the hospital and required more sophisticated care—such as that offered in the intensive care unit—tended to owe more money. Roughly 3% of patients—about 423—were charged more than $2,500 in out-of-pocket fees, and 0.3%—about 49—were charged more than $4,000.

Kao-Ping Chua, MD, PhD

We should not penalize people for getting sick.

— Kao-Ping Chua, MD, PhD

“In our paper, each additional day of hospitalization was associated with $53 higher out-of-pocket spending for patients," Chua says. "If Medicare Advantage patients with COVID-19 are hospitalized for more days on average than patients in our study, we would expect their out-of-pocket spending to be higher, assuming cost-sharing waivers from insurers expired."

Chua and Conti also found that each additional day of an ICU stay was associated with a $63 increase in out-of-pocket spending. However, Chua says that it is “hard to estimate how much this percentage would increase” for patients with COVID-19 “without knowing specific details about hospitalization benefits and resource utilization among patients hospitalized for COVID-19.”

Even a few nights in the ICU would be prohibitively expensive for many, if not a majority. In 2018, 40% of Americans reported that they did not have an extra $400 on hand in case of emergencies, let alone an extra $987 or $2,500.

Such statistics, the researchers write, only underscore the critical importance of extending or implementing cost-sharing waivers for COVID-19 treatment. They call on the federal government to take action on this issue. With President Joe Biden's change in administration, Chua says, "prospects for a federal mandate may be better."

Cost-sharing waivers are currently exempt from federal protection under HR 6201, better known as the Families First Coronavirus Response Act (FFCRA). Signed into law by former President Donald Trump on March 18, 2020, the FFCRA requires insurers to absorb the financial impact of COVID-19 testing but not that of COVID-19 hospital stays. In short, insurers can start making their clients foot a portion of the latter bill whenever they want to.

How To Get Help Paying for High Charges

If you're currently uninsured and need to get COVID-19 care at a hospital, your costs may be covered by the federal government. Most hospitals take part in the CARES (Coronavirus Aid, Relief, and Economic Security) Act of March 2020 which covers hospital bills of uninsured patients with COVID-19.

"Health care providers who have conducted COVID-19 testing or provided treatment for uninsured individuals with a COVID-19 primary diagnosis on or after February 4, 2020 can request claims reimbursement through the program electronically and will be reimbursed generally at Medicare rates, subject to available funding," according to the Health Resources and Services Administration.

If you are insured and are experiencing some of these out-of-pocket costs, consider reviewing your medical bill for any discrepancies. FAIR Health recommends looking for overcharges, double-billing, and incorrect dates of service. If you believe there are errors in the bill it's always best to contact the hospital. And if each procedure or service isn’t listed separately, ask for an itemized bill.

The information in this article is current as of the date listed, which means newer information may be available when you read this. For the most recent updates on COVID-19, visit our coronavirus news page.

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Article Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Chua K, Conti R. Out-of-pocket spending for influenza hospitalizations in Medicare Advantage. American Journal of Preventive Medicine. February 17, 2021. doi:10.1016/j.amepre.2020.11.004

  2. Sun LH, Bever L. This flu season has now reached pandemic levels (but it’s not technically a pandemic. Washington Post. Updated February 9, 2018.

  3. Michigan Medicine—University of Michigan. As insurers end grace period for COVID-19 hospital costs, study estimates potential bills. EurekAlert! Updated February 18, 2021.

  4. Chua K, Conti R. Despite the Families First Coronavirus Response Act, COVID-19 evaluation is not necessarily free. Health Affairs. Updated April 17, 2020.

  5. Health Resources and Services Administration. COVID-19 claims reimbursement to health care providers and facilities for testing, treatment, and vaccine administration for the uninsured. Updated January 2021.

  6. FAIR Health. How to review your medical bill.