How hospital fixed indemnity coverage works
We all know that a single night in the hospital can be enough to strain many households’ finances, but consider this:
- $2,424 per day1 – cost of an average inpatient hospital stay in 2017 (the most recent year reliable data could be found)
- $4,328 / $8,3522 – the average ACA individual and family deductible amounts in 2017
- 23%3 – the portion of Americans who say they have nothing set aside in savings
If you’ve been hearing more about hospital indemnity plans (HIP) lately, facts such as these may be why.
While a lot of us may be at least vaguely familiar with the term, a lot of us aren’t exactly sure what a hospital indemnity plan is or does.
Hospital indemnity definition
Hospital indemnity insurance is considered fixed indemnity coverage, which means that when you incur covered medical expenses resulting from hospitalization, surgery, chemotherapy and radiation services, your HIP will pay a fixed benefit (i.e., a set amount). That amount may be per day, per week, per month, per visit or per event, depending on the plan and the benefit that applies.
In the simplest of terms, a hospital indemnity policy is coverage that provides specified fixed-dollar-amount benefits for covered hospital services and durations, regardless of the actual cost of the service. HIP policies are “standalone,” which means they do not coordinate with your other health insurance coverage. In some states, you must already have a major medical policy in order to obtain supplemental coverage.
Some hospital indemnity plans cover additional services such as ambulance trips, second surgical opinions, and even chemotherapy and radiation. Optional health maintenance and diagnostic testing benefits that pay a fixed amount for preventive care, X-rays, urgent care and other services may also be available with some plans. The options and benefits available to you and premium will vary by plan.
How it works
We’ve established what hospital indemnity coverage is, but let’s look at a couple of examples illustrating the practical use of indemnity benefits.
Susan undergoes laparoscopic gall bladder surgery. The procedure is performed same-day at an outpatient hospital surgical facility. Her condition was not pre-existing.
Susan has purchased a hospital indemnity plan with a $1,000 per injury or illness deductible.
|Benefits covered by Susan’s hospital indemnity plan||Amount|
|Outpatient surgery facility benefit||$1,200|
|Outpatient surgeon benefit||$1,800|
|Outpatient assistant surgeon benefit||$360|
|Benefits payable before per injury or illness deductible||$3,900|
|Less per injury or illness deductible||($1,000)|
|Total benefits paid||$2,900|
Again, your actual hospital indemnity benefits will vary based on the plan and options you select as well as your specific medical situation.
What hospital indemnity coverage is not
Hospital indemnity plans are not major medical insurance and do not replace ACA-compliant coverage. As such, HIP is not subject to the Affordable Care Act, which means you can be denied coverage based on your health history.
Is hospital indemnity insurance right for you?
Only you can determine whether or not hospital indemnity coverage will be a valuable addition to your healthcare benefits. If you are interested in additional benefits to pay for hospitalizations or outpatient surgeries, HIP may be worth your consideration. Working with a health insurance professional may help you decide.
To learn more about HIP and ask specific questions, call 866-278-1464 to speak with a licensed agent or find a local agent who can discuss hospital indemnity options with you.