Why Hospital Indemnity Insurance?

Jenifer Dorsey
2018-09-11 June 15th, 2017 |
Read time: 9 minutes

5 Reasons to Consider Hospital Insurance 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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Originally Published On June 15th, 2017

Footnotes