What is a Hospital Indemnity Plan and Why Do You Need It?

By James O'Neal

The number one reason for bankruptcy in the United States is unpaid medical bills. Every year, millions of citizens can lose everything when a medical tragedy strikes. And, many of them do have medical insurance.

Unfortunately, it is not enough to cover the high costs of extensive hospital stays. The Kaiser Family Foundation reports almost one-quarter of Americans struggle to pay out-of-pocket medical expenses.

So, when the unexpected happens, such as an extended time away from work, finances can quickly sink. But, having more coverage for hospital stays can make a difference. A hospital indemnity plan can be perfect for this.

Read on to find how a hospital indemnity plan works and why you need one.

It is Not Just Another Insurance Policy

We all know that a health policy covers doctor’s visits and routine tests. Some of us have out of pocket cost which varies depending on the type of coverage.

And, once we pay our deductible for the year, some costs are fully covered. Or, at a percentage. Individuals may still need to pay up to 40% of the costs depending on their plan.

And, it’s the insurer who decides what they will pay and what is not part of the coverage.

The funds from a hospital indemnity plan will pay for whatever insurers do not cover. Deductible amounts, prescriptions, or co-payments are payable from the benefit.

Rather than an insurer paying part of the costs, the indemnity plan is payable to you. You decide where it goes.

You Can Cover the Whole Family

When tragedy strikes, it doesn’t discriminate. Sudden critical care needs or severe injury can land anytime. Usually, we are not ready for it.

If something should happen to a spouse or a child, an indemnity plan can be a financial security blanket.

Most families have little to no savings for emergencies. Even the co-pay on a hospital stay can be out of reach. Covering all the costs allows your family to concentrate on getting better.

Instead of how you’ll pay the escalating bill.

A Hospital Indemnity Plan Pays for Emergency Room Visits

A hospital stay is not necessary to trigger the benefit of an indemnity plan. Sometimes an emergency room visit turns into a hospital stay. But, not always.

In some cases, patients leave and then return for outpatient procedures. Depending on the plan you choose, this can be part of the coverage too.

Also, you can ask for provisions for x-ray, outpatient surgery, and follow up doctor visits. Even lab and diagnostic services can be part of your coverage.

It is Very Affordable

Depending on the plan you choose, rates can fit just about any budget. If you have an employer who offers this benefit, it can be as low as a few dollars for every $100 of coverage for example.

So, if you decide on $500 per day of benefit, this may be less than $10 a month. Of course, if your employer does not cover some of the benefits, costs will be more. They can range from $50 per month to over $400, so shopping around is a great idea.

And, as your age increases, so does the premium. It is always best to get coverage well before turning 65. Again, critical injury or illness can occur anytime. But, as we age, the risk of hospital visits increases.

There are No Restrictions on Health Care Providers

Unlike traditional health policies, this is a supplemental program. So, no matter where you receive treatment or from whom, you can file your claim.

Depending on the insurer, the plan begins paying you as soon as the claim has approval. There is no need for the insurer to get medical records. Or, to have lengthy reviews to establish coverage.

And, there is no underwriting process. For hospital indemnity coverage, no one can be turned down.

Loss of Income as Part of the Coverage

The highest cost of a lengthy hospital stay for some can be the loss of income. Especially if a family has only one breadwinner.

Medical co-pays and hospital bills are payable over time. But, the sudden loss of income makes immediate and dramatic changes. When you choose a hospital indemnity policy, you can decide to cover up to one year’s salary.

You may not ever need this much. But, most professionals advise getting more coverage than you need.

Resting Easy is the Best Way to Recover

No one likes being in the hospital. It is stressful and very uncomfortable. So, imagine having an extended stay while also worrying about how you’ll pay the bill.

The average hospital stay can top $30,000. And, you know that your insurance will never pay all of it. All that sleepless worry will not help you get home any faster.

In fact, it might well delay your recovery. Doctors have long supported the theory that stress negatively affects the immune system. Knowing you are financially ready can only help the situation.

Who Should Get a Hospital Indemnity Policy?

This coverage is for anyone without the resources to pay their share of a hospital stay. And, those who are unprepared for a loss of income for weeks or months. Of course, this represents a large group of people.

And, some families do have reserve funds for this eventuality. For everyone else, a hospital indemnity plan can be flexible and affordable. Choices of coverage can align with needs.

The best way to determine which options are best for you is to get sound advice.

We represent many insurers and can help you find the best coverage. Whether you need health, an annuity, or family coverage. We help you prepare. Contact us here for more information.