5 Reasons to Consider Hospital Insurance
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.
You may have heard that hospital indemnity insurance (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
The average daily cost (operating and non-operating expenses) for a hospital stay in the US in 2017 (the most recent year for which this data is available) was $2,424.
With ACA deductibles averaging more than $4,000 for individuals and more than $8,000 for families in 2017, and the average hospital stay in the US in 2017 lasting between 5 and 6 days (or 5.4 days to be exact), you can see how easy it is to wind up owing your entire deductible amount for one hospitalization.
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 of the benefit remains the same regardless of the actual cost of those services.
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 survey to reinforce this truth comes from Bankrate.com, which in 2017 found that just 37% of Americans have enough savings to pay for a $500 or $1,000 emergency.
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 can provide needed financial assistance at a difficult time.
Note that if you select more coverage, such as opting for critical illness benefits, you will likely pay more in month premium.
4. If you don’t have an ACA plan, hospital indemnity can provide some level of coverage
If you choose not to enroll in an ACA-compliant major medical plan or are unable to obtain one, a hospital indemnity plan can still provide some healthcare benefits. Please note that in some states, you must already have an ACA-qualifying major medical policy in order to enroll in a hospital indemnity plan.
Remember, hospital plans are not minimum essential coverage, which means they do not include essential health benefits or covered preventive services as outlined by the ACA, and are not guaranteed issue. You may be denied coverage based on pre-existing conditions or health history.
5. You can apply for 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 are concerned you won’t be able to afford your major medical deductible, a hospital indemnity plan may be worthwhile for you. Remember, enrollment in these policies is subject to carrier approval.
How much does hospital indemnity cost?
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