Even with Medicare coverage, a hospital stay can bring unexpected out-of-pocket costs like deductibles and high copays, especially for extended stays. Hospital stays can add up quickly, with average daily costs around $3,130. It's no surprise why medical bills are the leading cause of financial stress and bankruptcy in the U.S.
That’s where hospital indemnity insurance can come into play. Hospital indemnity insurance is designed to provide cash benefits during hospital visits. This type of supplemental coverage can help ease the financial burden and provide support and flexibility during recovery. Here’s what to know about how this type of policy works and what it typically covers, so you can decide if it's right for you.
Hospital indemnity insurance (HI) is a supplemental insurance policy that provides fixed cash benefits specifically for hospital-related expenses. Unlike traditional health insurance, where payments go directly to the healthcare provider, benefits from this policy are paid directly to you. This allows you the flexibility to use the funds for medical bills or any everyday expenses you may have while dealing with healthcare costs.
Hospital indemnity insurance offers invaluable support during challenging times by providing financial assistance that can ease the burden of medical costs.
Here are some key benefits:
Hospital indemnity insurance is designed to provide financial assistance for expenses incurred during hospital stays. This type of insurance can help alleviate some of the costs associated with admissions and related treatments and services.
Below are the typical coverages included in a hospital indemnity insurance policy:
In the event of a hospital admission, hospital indemnity typically provides a lump sum of cash paid to the beneficiary.
Following a hospital admission, hospital indemnity insurance will pay out a per-day benefit during your stay. This amount will depend on the coverage you elect.
If you are hospitalized and admitted to the intensive care unit (ICU) the insurance coverage could pay a higher daily benefit amount than being admitted to a standard hospital room stay.
Some plans may also include a benefit payout even during observation while in the hospital or for an outpatient procedure.
Hospital indemnity insurance may also provide a benefit payout in the event of ambulatory emergency transportation to a medical facility.
Hospital indemnity insurance can be a source of financial support and peace of mind in the case of a hospitalization, but it doesn't cover everything.
Hospital indemnity insurance does not replace major medical insurance; you still should have Original Medicare and ideally additional health insurance coverage in the form of a Medicare Advantage plan or Medigap policy. Hospital indemnity insurance would not cover routine care, doctor visits, and diagnostic testing that Medicare coverage would.
It's also important to note that although not all, some hospital indemnity insurance policies may have a waiting period before coverage begins, typically 30 days. There may also be exclusions and longer waiting periods for hospitalizations from pre-existing conditions, these are typically 90 days.
You do not need to be enrolled in Medicare to purchase a hospital indemnity insurance policy, but if you do have Original Medicare coverage with or without additional coverage through a Medigap Plan or Medicare Advantage Plan, the hospital indemnity policy will help cover deductibles, copays, and coinsurance. The cash payout can provide extra financial support during hospital stays.
Hospital costs are often one of the biggest “what ifs” seniors think about when choosing a Medicare plan. While premiums are important, the structure of hospital copays can make a big difference in overall costs.
“When we help seniors compare Medicare plans, hospital costs are always part of the conversation. The difference between a one-time $500 copay per stay and paying $500 per day can add up quickly. Hospital indemnity insurance helps bridge the gap and gives people confidence that a hospital stay won’t turn into a major financial burden,” explains Kari Mellone, senior insurance agent at Twin City Underwriters.
That added layer of financial support can make it easier to choose a plan that fits your budget today without worrying about what could happen tomorrow.
Hospital indemnity insurance can be beneficial for anyone who experiences a hospital stay, although there are particular groups of individuals where it makes most sense due to probability, health, lifestyle, finances and more. If you fall into one or multiple of these categories, it can be a good fit for you.
Hospital indemnity insurance can lessen the financial strain following a hospitalization and bring some peace of mind to a stressful situation. When determining whether hospital indemnity insurance is the right choice for you, it's important to consider several factors. First, evaluate your current coverage and your financial tolerance for risks of high hospital bills. Next, think about your budget and specific healthcare needs. Finally, review how this insurance can complement your Medicare plan.
Hospital indemnity insurance can absolutely be worth it to the right individual. This is especially true in situations where they are coupled with a health insurance plan, where a hospitalization could result in significant patient responsibility.
Hospital indemnity insurance can be very affordable. Premiums typically range between $10-$60 each month. The cost of the premium will directly impact the benefit structure, so the more you pay each month, the more you will get in the event of a hospitalization.
Yes, because you receive the benefit in the form of cash in hand, you can use the funds to pay medical bills you've received or non-medical expenses like transportation, bills, food, care for pets while you are away or anything else that makes sense for your needs.
When comparing hospital indemnity insurance policies, you want to consider several key factors. Begin by looking at the benefit amounts and limits, as well as any waiting periods that may apply. Also, if coverage for things like intensive care unit (ICU) stays and ambulance services is important to you, ensure that it is included. Ultimately, the most critical aspect to weigh is whether the premium aligns with the value of the benefits offered.
Even though hospital indemnity insurance is relatively straightforward, it can be helpful to have an experienced insurance agent on your side to help you compare plans and choose what coverage is appropriate for your needs. At Twin City Underwriters, we specialize in senior insurance from Medicare, hospital indemnity, dental and more. Our trusted team of agents will help you find the coverage that works best for you, assist with the enrollment process, and answer your questions whenever they arise. No matter where you are in the process, our team is here to help you navigate your options.
If you have questions about hospital indemnity insurance or Medicare coverage, reach out to our team today.
Sources:
https://nchstats.com/average-cost-of-hospital-stays-in-us/
https://www.metlife.com/insurance/accident-health/hospital-indemnity-insurance/
https://www.cigna.com/employers/additional-insurance/hospital-care-insurance
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