Did you know one of the leading causes of bankruptcy is medical bills? One way to ensure you and your family don’t become part of that statistic is by having a supplemental insurance policy in place. A three-day hospital stay averages over $30,000 in expenses. A hospital indemnity plan is the best way to plan for those unexpected costs.
What Is Hospital Indemnity Insurance?
Hospital indemnity insurance policies are used as supplemental insurance plans to help pay for costs associated with hospital stays. If your primary insurance doesn’t pick up all the hospital costs, your hospital indemnity plan helps to pay the remaining expenses. It should not be used to replace other healthcare coverage, only to complement it.
The plan will provide a lump sum payout to you in exchange for a monthly premium. Those funds can be used for deductibles, copays, coinsurance costs, transportation, rehabilitation, or any other expenses you may have incurred as a result of your hospitalization.
Benefits are paid when you are admitted to a hospital for a covered injury or sickness. Some policies also provide benefits for emergency room visits, outpatient surgery, ambulance services, or stays in a rehabilitation facility. The benefit paid is usually based on the length of your stay, and the lump-sum payment is issued directly to you, not the medical facility.
How Does Hospital Indemnity Insurance Work?
Hospital indemnity plans in Texas are quite simple to understand. You pay a monthly premium, and if you are admitted to a hospital, the plan pays you benefits. You can use those benefits to help pay for expenses your primary insurance did not cover or for other related expenses. There is no limitation on how the benefits can be used. For example, if you need childcare while you recover, you can use the funds to pay for those services.
Most plans do not involve a deductible, and members are not limited to certain provider networks. There is usually a 30-day waiting period for events that lead to hospital confinement, but that waiting period often does not apply to accidental injuries.
The policy benefit is typically a fixed daily amount. For example, a plan that allows for $300 per day would pay you $900 for a three-day hospital stay. There may be a limit on how many days your policy covers. It may also provide an Initial Confinement Benefit. As it sounds, this benefit is paid to you as soon as you are admitted to a hospital, before you have even stayed one day. If it had applied to our example above and the Initial Confinement Benefit was $500, you would have been paid a total of $1400.
Some hospital indemnity plans in Austin, TX, also give you the option to add benefits for childbirth. For example, they would cover the mother’s admission and delivery and the newborn’s stay in the neonatal intensive care unit.
What Does Hospital Indemnity Insurance Cover?
The coverage will depend on the policy, but we’ll discuss common coverage here. In general, most hospital indemnity insurance plans cover:
● Hospitalization (with or without surgery)
● Critical Care Unit (CCU) stays
● Intensive Care Unit (ICU) stays
For an added premium, your policy may include coverage for:
● Emergency room visits
● Continuous care
● Outpatient surgery
● Ambulance transportation
● Outpatient diagnostics
● Outpatient radiography
● Outpatient lab tests
● Physician office visits
Hospital Indemnity Insurance versus Critical Illness Insurance
Hospital indemnity plans are similar to critical illness insurance plans but have key differences.
Critical illness insurance also pays a lump-sum amount when you qualify for benefits. Like hospital indemnity insurance, you can use those funds to pay for any expenses you need. However, a critical illness plan only provides benefits for certain health conditions. Typically these plans cover heart conditions, cancer, organ damage and transplants, and strokes.
A critical illness plan will not pay for hospitalization due to an injury, and many still do not include benefits for a COVID-19 related hospitalization. (Many are working on upgrading their benefits to include coverage for COVID and other infectious diseases.)
If you are enrolled in both a critical illness and hospital indemnity plan, you would be able to use funds from both plans to pay for hospital stays, travel expenses, follow-up care, etc.
Who Is Hospital Indemnity Insurance For?
Hospital indemnity plans are for anyone who wants peace of mind in case the unexpected happens. However, there are a few groups of people who should definitely consider one of these plans.
● Individuals with chronic conditions that may lead to hospitalization
● Those who know they have upcoming procedures requiring a hospital stay
● Pregnant women or women who are trying to become pregnant
● Individuals who want extra coverage for accidents
● Individuals with high-deductible insurance plans
How Much Do Hospital Indemnity Plans Cost?
Premiums for hospital indemnity insurance in Texas will depend on the benefits and a few personal factors. Personal factors include gender, age, geographic location, and tobacco use. You can also add dependents to the policy, which will increase the premium.
You can find some plans with premiums as low as $7 per month. Those with added benefits begin around $19 per month and can go up to several hundred dollars. Generally, most plans provide benefits between $100 and $600 per day.
Are Hospital Indemnity Plans Worth It?
If you prefer to have maximum protection for unforeseen events, a hospital indemnity plan is a great option for you. Younger adults starting families find value in these plans during childbirth. Older adults find value because there is a higher risk for hospitalizations as we age. Plus, hospital indemnity insurance plans are often very affordable, making them easy to fit into just about any budget.
An indemnity plan will be even more valuable if you have a high-deductible health insurance plan. However, if you have a large Health Savings Account (HSA) balance, you may not think an indemnity plan is necessary. It all depends on how much risk you are willing to take.
How to Choose a Hospital Indemnity Plan
If you’ve decided you want to enroll in one of these plans, there are a few things to consider when selecting a policy.
Duration of Coverage
There are two things to look at when comparing the length of coverage a policy provides. First, the waiting period. Thirty-day waiting periods are not uncommon, but you may want to reconsider a policy with a longer waiting period. You may have different waiting periods for different procedures, especially if the policy provides more extensive benefits.
The second consideration is the term limits. Many policies do not limit the number of days they provide benefits, but some do.
You must be 18 to purchase a hospital indemnity insurance plan. You’ll be able to renew your policy up to age 65, but your premiums will increase with age. Once you turn 65, you are eligible for Medicare benefits. You can still get a hospital indemnity plan if you are on Medicare, depending on the type of policy you have. Indemnity plans are popular among Medicare beneficiaries who enroll in a Medicare Advantage (Part C) plan.
Individual or Family Coverage
Hospital indemnity insurance is available to individuals and families. The more dependents, the higher the premium. If you have a spouse and other dependents, you should consider the extra cost of adding them to your policy.
Medical bills pile up quickly, so you want to make sure you receive your indemnity benefits as quickly as possible. Each policy should outline how long it takes to receive the funds after a qualifying event. For example, a policy that pays claims within ten business days is typical.
Our licensed insurance agents are happy to answer any questions you have about hospital indemnity plans. We offer a wide variety of plans and will find one that fits your needs and budget. Give our office a call today and schedule your complimentary consultation.