Hospital Indemnity Insurance

 

An insurance plan for hospitalization due to an injury or critical illness

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Are you prepared to pay around $10,400 out of pocket for a 4-to 5-day hospital stay?[1]

The average cost of hospitalization can easily exceed the average major medical deductible amount of $4,328 (2017).[2]

Are you able to pay a $4,000 medical bill in order to reach your deductible and access your major medical plan benefits?

Whether as a stand-alone alternative to major medical hospitalization benefits or to supplement a primary medical plan, a hospital indemnity plan with additional critical illness insurance benefits helps cover the costs associated with being admitted to the hospital when you become sick or injured.

What Does Hospital Insurance Cover?

Hospitalization insurance plans generally provide benefits for medical services associated with being hospitalized due to an injury.

Some plans include coverage for critical illnesses like cancer, heart attack, stroke, major organ transplant, coma, and kidney failure, while others allow you to add these coverages to your plan for an additional cost.

Because these plans are highly customizable, you may also be able to obtain additional coverage for outpatient services like preventive care and urgent care, and diagnostics (X-rays and lab tests).

What Hospital Insurance Covers
  • Hospital room and board

  • Inpatient physician’s visits

  • Inpatient prescription medications

  • Inpatient surgery

  • Outpatient surgery

  • Ambulance services

What Hospital Insurance Does Not Cover
  • Pre-existing conditions, including pregnancy

  • Preventive care such as routine physicals

  • Any non-medically necessary surgical procedures

  • Outpatient prescription medications

  • Experimental procedures

Legal Disclaimer: The above list is not a complete list of hospital insurance coverages and exclusions and is intended only as an example.

Ready to get coverage for an unexpected hospital stay?

Pros and Cons of Hospital Insurance

Here are a few of the pros and cons to consider when you’re thinking about applying for a hospital indemnity + critical illness insurance plan.

Pros:
  • May be guaranteed renewable – You won’t be singled out for a rate increase or cancellation based solely on changes to your health.

  • You choose how to use benefits payments – There is no restriction on how to use the money you receive.

  • Apply year-round – There is no official open enrollment period, and you can apply anytime.

  • Don’t pay for coverage you don’t need – Plans are highly customizable; you can choose from various health benefit levels.

  • Keep your doctor – No provider network limitations for fixed indemnity plans means you can visit your preferred healthcare provider.

Cons:
  • Unlike ACA plans, premiums are based on age and health – The younger and healthier you are the lower your monthly premium, conversely, older and sicker individuals will pay more.

  • Less coverage than major medical – Preventive care and many other essential health benefits such as annual doctor’s visits, prescription drugs, vaccinations, and pre- and post-natal care are not covered. If you think you will need any of the 10 essential health benefits guaranteed by the ACA-qualifying plans, then a hospital insurance plan may not be right for you.
  • Pre-existing conditions are not covered

  • Not ACA-qualifying major medical coverage – Hospital indemnity insurance is a form of alternative coverage, not ACA-compliant major medical coverage.

Legal Disclaimer: The above list is not a complete list of pros and cons.

Think a hospital indemnity insurance plan may be right for you?

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Who Should Get Hospital Insurance?

Hospital plans may be beneficial to people who:

  • Have an employer’s or an ACA high-deductible health plan (HDHP)
  • Want to have a certain level of coverage to pay the bills should they require hospitalization and be unable to work for a period of time
  • Have a child that may require hospitalization and round-the-clock parental care
  • Missed open enrollment for a major medical plan and do not qualify for a special enrollment period
  • Have recently lost medical coverage due to turning 26
  • Are a part-time seasonal worker or contractor that doesn’t have access to an employer’s major medical plan

How Hospital Insurance Works

 

Hospital insurance is a “fixed indemnity” plan, meaning you receive a set benefit amount regardless of amount charged for eligible medical expenses from your provider. Fixed indemnity benefits may be paid per day, per week, per month, per visit or per event.

For example, your plan may pay $500 per day for inpatient hospitalization (hospital room and board) and cover one doctor’s visit per day while hospitalized at a rate of $100 per visit. If you are hospitalized for 5 days and see the doctor one time each day, your fixed benefit payment amount will be $3,000 for these services.     

1

You pay monthly premiums in order to maintain your hospital plan and receive fixed indemnity coverage for eligible medical expenses. You may or may not elect to have a deductible. The lower your deductible, the higher your monthly premium.

2

Present your insurance card when you receive medical care. Unless you assign your benefits elsewhere, the insurance company receives your bill and pays you a lump-sum benefit based on the covered services provided. See some more example scenarios and cost breakdowns.

3

Your hospital plan does not coordinate benefits with any other health insurance you carry. If you’re using a hospital plan alongside a major medical plan, your major medical plan also processes payments.

4

You will continue to receive fixed payments from your hospital plan for covered care at the specified interval, such as $500 per day. Unlike major medical policies there is no annual or lifetime limit. The benefits will continue to be paid for as long as you’re receiving covered services up to any specified maximum.   

A hospital plan can help make you feel more in control when being admitted to the hospital.

How Much Does Hospital Insurance Cost?

Hospital plan premiums vary depending on the benefit level selected.

Plans can range from $50 per month to over $400 depending on your age, health and the level of coverage and any additional benefits you opt for.[1]

It’s important to read and understand the coverages and benefits included in any plans you’re considering in order to know if the plan makes sense for you and your budget.

Ready to apply for a hospital indemnity health plan?

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by Jenifer Dorsey September 7th, 2018
by Jenifer Dorsey September 6th, 2018

[1] (2018). Hcup-us.ahrq.gov. Retrieved 8 August 2018, from https://www.hcup-us.ahrq.gov/reports/statbriefs/sb180-Hospitalizations-United-States-2012.pdf ; 4.5 days is the average length of hospitalization in the US in 2012.

[2] Pennza, A. (2018). Average Health Insurance Costs for 2017. Peoplekeep.com. Retrieved 9 August 2018, from https://www.peoplekeep.com/blog/affordable-care-act-policy-costs-up-in-2017

[3]Insurance, U., & Writers, S. (2013). Understanding Hospital Indemnity Insurance - InsuranceQuotes.org. InsuranceQuotes.org. Retrieved 9 August 2018, from http://www.insurancequotes.org/health/understanding-hospital-indemnity-insurance/