An unexpected accident or illness can happen at any moment. And it can leave you with the financial burden of medical bills, even if you have major medical health insurance.
But the good news is: Hospital indemnity plans can protect you in these situations.
A hospital indemnity health insurance plan pays you a set amount of money for covered medical services like hospitalization. Hospital indemnity plans can also cover things like telemedicine and prescription drugs to help fill gaps in coverage.
Hospital indemnity plans take on several names: Fixed indemnity health insurance, hospital insurance, hospital cash plans, health care indemnity, medical indemnity, health benefit indemnity, or indemnity medical plans.
No matter the name, these plans all work the same way: An insurance company can pay cash directly to you (or you can have the hospital submit a claim), so you can use it toward out-of-pocket expenses your health insurance might not cover. But it’s important to know this type of plan is a supplement to - not a replacement for - major medical plans.
Hospital indemnity health insurance is not major medical insurance and does not meet the requirements of the Affordable Care Act (ACA). This type of coverage works differently than the short-term health insurance or Obamacare health plans that you might be familiar with.
Hospital indemnity health insurance differs from major medical insurance in five ways:
No network restrictions
Since hospital indemnity plans pay you a flat amount for medical services, you can see any doctor or visit any facility of your choice. There are no network restrictions for going out of network. And you don’t have to coordinate your major medical plan with your indemnity plan.
If you have a traditional health insurance plan, you have to meet a deductible before your insurance company begins paying your medical claims. But hospital indemnity insurance plans pay a fixed amount for your medical services right away. In other words, you can use your hospital indemnity plan to help bridge your deductible gap.
No coinsurance percentage
Like deductibles, major medical insurance plans also have coinsurance percentages. After reaching your deductible limit, you’re still responsible for paying a percentage of your medical bills - usually 20 to 30% of the remaining total. This rule doesn’t apply to hospital indemnity insurance, but you can instead use your fixed benefit cost to cover the cost of coinsurance.
It’s your money
If you buy a hospital indemnity plan, your insurance company will pay you a fixed amount to pay for your medical bills or use the money to supplement income, child care, or any expenses you faced while hurt or sick.
Hospital indemnity health insurance plans can vary. For instance, one may cover short-term hospital stays, while other cover you for a longer period. The overall goal of hospital indemnity insurance is to reduce your out-of-pocket responsibility for big-ticket medical expenses.
That in mind, a hospital indemnity plan may make sense for:
But remember, it’s called a “fixed” indemnity plan for a reason: So let’s say you have a minor accident that requires a visit to the doctor. Your fixed indemnity plan could pay $100 for your doctor visit - no matter the cost of the visit.
So if your doctor only charges $99 for the office visit, you make an extra dollar out of the appointment. But you could also be charged $315 for an office visit at a well-known clinic. Regardless, you’d still get $100 for the medical expense, so it’s important to know how much you’re going to be charged before going to an appointment.
Any individuals or families who have a history of medical expenses or want extra protection to keep their out of pocket expenses low - just in case.
A hospital indemnity plan may be right for you if:
Hospital expenses average nearly $4,000 a day, with a typical hospital stay costing more than $15,000 on average. So let’s say you have a $6,500 deductible on your health insurance plan and are responsible for 30% coinsurance. This means you would owe a total of $8,200 out of pocket for a $15,000 hospital bill. And the reality is: Not many Americans can afford that expense.
In fact, medical debt is the No. 1 reason for bankruptcy in America: Over 500,000 households file for bankruptcy each year because of the mountain of medical bills they cannot afford to pay. CNBC also reported that since the enactment of the ACA, medical bankruptcy has actually increased.
So the bottom line is that hospital indemnity insurance can be a safety net if you’re facing large medical expenses. It’s up to you to weigh your options and compare plans.
Get a quote today. It’s a hassle-free process that takes just minutes out of your day.