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Why Hospital Indemnity?

Why Hospital Indemnity?

Posted Jun 15, 2017 by Jenifer Dorsey

5 Reasons to Consider This Health Insurance Option in 2017

Health insurance deductibles tend to be something we think little about until medical bills start showing up. At that point, even those who find their monthly premium payments somewhat manageable may feel financially strained as they pay for healthcare fully out of pocket until they meet their plan deductible.

 

Health plan deductible 101

 

You may have heard that hospital indemnity coverage (i.e., a fixed-indemnity benefit plan) can be a helpful addition to your family’s healthcare benefits if you are self-employed, own a small business or do not qualify for job-based benefits. But … another health plan? Why would you buy additional coverage when you already have major medical insurance (i.e., an Obamacare plan)?

1. Having health insurance may not mean your hospital bills get paid in full.

On average, hospital expenses per inpatient day totaled $2,271 in 2015.[1] With deductibles averaging more than $6,000 for individuals and more than $12,000 for families for the lowest-cost 2017 Obamacare plans, you could be paying 100 percent out of pocket for a single day—possibly two or three—in the hospital. [2]

While a hospital indemnity plan does not coordinate with your major medical policy, it does provide separate benefits that can be applied to covered healthcare services resulting from hospitalization, surgery, chemotherapy and radiation services. These benefits apply to a specific duration and the amount remains the same regardless of the actual cost of those services.

 

How hospital indemnity works, an example

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2. As a nation, we tend to lack emergency funds.

By providing specified benefits that can help with out-of-pocket healthcare expenses, supplemental coverage such as a hospital indemnity plan can help when illnesses and injuries happen.

Every now and then we see new survey results reporting Americans’ lack of financial preparedness for unexpected expenses. One of the more recent surveys to reinforce this truth comes from Bankrate.com, which last year found that just 37 percent of Americans do not have enough savings to pay for a $500 or $1,000 emergency.[3]

3. Many hospital indemnity plans include critical illness benefits, too.

Many hospital indemnity plans include critical illness benefits for conditions such as cancer, heart attack and stroke. These benefits include lump-sum payments upon diagnosis of covered conditions. The payments may be used to pay for healthcare, transportation, childcare, living expenses and more—wherever the policyholder most needs the help. So, enrolling in a hospital indemnity plan that includes critical illness benefits is a bit like getting two for the price of one.

4. If you are exempt from Obamacare, hospital indemnity can provide some level of coverage.

Those who are exempt from the Affordable Care Act’s individual shared responsibility provision (i.e., individual mandate) may still want some healthcare benefits, and a hospital indemnity plan may be a lower-cost option for these individuals.

Of course, it is important to note that hospital indemnity (i.e., fixed-indemnity) plans are not minimum essential coverage, which means they do not include essential health benefits or covered preventive services as outlined by the ACA, will not prevent you from owing a tax penalty if you are not exempt, and are not guaranteed issue—you may be denied coverage based on health history.

5. You can enroll in a hospital indemnity plan at anytime.

Hospital indemnity plans are not subject to the ACA, which means they are available year-round and not just during open enrollment. If you decide you would like additional benefits or have Obamacare buyer’s remorse due to concerns you can’t afford your Obamacare deductible, a hospital indemnity plan may be worthwhile for you.

 

How much does hospital indemnity cost?

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[1] The Henry J. Kaiser Family Foundation. “Hospital Adjusted Expenses Per Inpatient Day.” Accessed Feb. 22, 2017. http://kff.org/health-costs/state-indicator/expenses-per-inpatient-day/?currentTimeframe=0

[2] Mangan, Dan. “Obamacare Deductibles are On the Rise for 2017, Along with Monthly Premiums.” CNBC. Oct. 26, 2017. http://www.cnbc.com/2016/10/26/obamacare-deductibles-are-on-the-rise-for-2017-along-with-monthly-premiums.html

[3] McGrath, Maggie. “63% of Americans Don’t Have Enough Savings to Cover a $500 Emergency.” Forbes. Jan. 6, 2016. http://www.forbes.com/sites/maggiemcgrath/2016/01/06/63-of-americans-dont-have-enough-savings-to-cover-a-500-emergency

This document is for general informational purposes only. While we have attempted to provide current and accurate information, this information is provided "as is" and we makes no representations or warranties regarding its accuracy or completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind. External users should seek professional advice from their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.

This is not qualifying health coverage “Minimum Essential Coverage”) that satisfies the health coverage requirement of the Affordable Care Act. If you don’t have Minimum Essential Coverage, you may owe an additional payment with your taxes. The termination or loss of this policy does not entitle you to a special enrollment period to purchase a health benefit plan that qualifies as minimum essential coverage outside of an open enrollment period. This product includes a pre-existing condition exclusion provision.

About The IHC Group
Independence Holding Company (NYSE: IHC) is a holding company that is principally engaged in underwriting, administering and/or distributing group and individual specialty benefit products, including disability, supplemental health, pet, and group life insurance through its subsidiaries since 1980.  The IHC Group owns three insurance companies (Standard Security Life Insurance Company of New York, Madison National Life Insurance Company, Inc. and Independence American Insurance Company), and IHC Specialty Benefits, Inc., a technology-driven insurance sales and marketing company that creates value for insurance producers, carriers and consumers (both individuals and small businesses) through a suite of proprietary tools and products (including ACA plans and small group medical stop-loss).  All products are placed with highly rated carriers.

IHC Specialty Benefits, Inc.
IHC Specialty Benefits, Inc., doing business as Health eDeals Insurance Solutions is a full-service marketing and distribution company that focuses on small employer, individual and consumer products. Health eDeals markets products via general agents online, telebrokerage, advisor centers, private label and directly to consumers. For more information about Health eDeals visit http://www.HealtheDeals.com.