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In short, hospital indemnity insurance is a kind of add-on insurance that can help you avoid massive financial debts, especially in times of medical emergencies.
The American Hospital Association has stated that a whopping over 30 million people in the U.S. are hospitalized every single year, unprepared for the incurred cost. With standard health insurance in p out-of-pocket daily costs can also surprisingly cause economic constraints—to add on to it the average hospitalization cost is roughly above $10,000.
The national bankruptcy institute has also acknowledged that medical loans and recurring costs are the top major cause of bankruptcy in the country. And the Census Bureau estimates say 20% of American households carry unpaid medical costs with the average median debt being $1,000 more. A sound Hospital indemnity can definitely help here to provide an economic safety net if you’re unfortunately hospitalized and left with massive medical bills to pay later on.
Hospital indemnity insurance is an additional or supplemental add-on plan you can also co-purchase adding to your normal health insurance. Paying monthly premiums likewise, just as any other insurance, and if you, unfortunately, end up in the hospital, you receive a fixed benefit sum paid directly to the beneficiary to help pay off the added cost.
An indemnity payment can be for almost anything, although people often use the money for ancillary deductibles, other insurance premiums, ambulance costs, medicines, to rehabilitate, or any additional home medical service aid costs. The cash is used for added costs that come up post recoveries like buying more groceries or babysitting costs.
The indemnity money is sent directly to the designated person . Not like health insurance, which has contracts with providers paying money directly.
Hospital indemnity insurance provides a kind of direct payout based on circumstances related to hospitalizations or other medical-specific healthcare services. A typical health insurance would have certain medical specifications on covered services whereas hospital indemnity insurance is flexible and can be distributed in whatever way you need.
However, this type of plan doesn’t have deductibles, coinsurance, or network restrictions.
A Hospital indemnity insurance policy might also cover your spouse and family.
Hospital indemnity insurance simply doesn’t cover medical care like a health insurance plan would and it’s not a substitute for health insurance. So, it’s instead meant to supplement a health plan or be a sort of add-on benefit.
Keep this in mind!
Hospital indemnity insurance won’t also help you with regular doctor visits and tests. It is meant for more serious medical needs only, such as hospitalizations.
All Hospital indemnity insurance policies also have certain limits, including:
The Hospital’s daily benefits, which is a set dollar amount that could be $100 to $1,000 roughly
Insurance companies like Aflac, Allstate, MetLife, Mutual of Omaha, and Protective offer hospital indemnity insurance via employers. Fewer companies let you buy individual hospital indemnity insurance directly from them.
Here are insurance companies that offer indemnity insurance for individuals to purchase directly:
Anthem
Cigna
Colonial Life
UnitedHealthcare
Remember Hospital indemnity insurance doesn’t replace your current medical insurance. So how do you know if you should purchase this kind of supplemental coverage? Here are a few reasons why you should consider hospital indemnity insurance in the following cases:
Any Hospital indemnity insurance can start at about a mere $10 a month for individual coverage, according to Cigna. You may pay much less if you get coverage via your employer as part of a benefits package.
Similar to most insurance plans, costs vary based on several specification factors, including your age, location, deductibles (if applicable), insurance company, and the total coverage amount.
You may pay much less for a hospital indemnity insurance policy if gotten through an employer. Protective offers policies via employers with coverage costs between $2 and $18 per month for a total duration of coverage that pays about $100 per day for hospitalizations. People under the age of 50 pay less than $5 per month.
Hospital indemnity insurance plans typically provide hospital stay daily benefits that vary depending on the policy terms. You’ll have to pay higher premiums for higher daily benefits limits. An insurance company may also provide different daily benefits for intensive care ICUs, outpatient surgeries, pregnancy, and other cancer treatments.
If you’re interested in purchasing hospital indemnity insurance, here’s a quick look at what to consider before selecting a plan for you or your family.
As you compare several hospital indemnity insurance plans, find out the payment timeline for each one. In other simpler words, how long after you’re admitted to the hospital do you receive your payout?
Another factor to consider is definitely the length of coverage. A hospital indemnity insurance plan covers you for a certain fixed number of hospitalized days, which influences how much you pay for the total coverage.
Two separate hospitalization events per year (an insurance company might consider it the same if you wound up hospital within a month of discharge)
Make sure to read the fine print always so you know exactly what the plan’s length of coverage is.
Indemnity insurance also usually has a waiting period before the insurance company pays you following a covered hospitalization, procedure, or treatment.
Like your medical plan, hospital indemnity insurance can cover you and your family including, your spouse and your children. Consider the coverage that would best fit your family’s total needs if you’re purchasing a plan with keeping them in mind as well.
Hospital indemnity insurance can be purchased by people between the ages of about 18 and 65, and monthly premiums start low and increase as you age typically. These age restrictions depending on the insurance company you choose and can vary a lot.
Applying for hospital indemnity insurance isn’t difficult. You can consult a licensed agent in any state or even shop online for a plan that fits your needs. Unlike health insurance, there isn’t a fixed insurance marketplace available. You can start your search by just asking your current health insurance plan provider to see if they offer hospital indemnity insurance. If not, you can often find out insurance companies or brokerages that offer auto, life, or other insurance plans that provide this type of benefit.
Once you’ve selected a plan, using your benefits is just as easy as submitting a simple form once you’ve received qualified medical care.
A supplemental hospital indemnity insurance policy can be a good solution if you’re concerned about potential health costs, especially if you expect to need medical care or have a child.
Hospital indemnity insurance policies can also prove a wise decision for people with a highly deductible health plan that comes with large out-of-pocket costs. It can also help pay out-of-network charges, which are usually higher than in-network care.
In these cases, hospital indemnity insurance can help out whether your existing health plan covers a portion of out-of-network care, such as a preferred provider organization (PPO) plan, with covers no out-of-network providers, such as a health maintenance organization (HMO) or exclusive provider organization (EPO) plan.
Hospital indemnity insurance can surely be a way to get financial assistance and keep you from the financial doldrums that usually follow up on huge medical debts, but always remember they’re supplemental plans and aren’t a replacement for health insurance at any cost.
1) What is the concept of indemnity in health insurance?
The concept of indemnity in health insurance refers to the principle of providing compensation for covered medical expenses. Indemnity plans, also known as fee-for-service plans, reimburse the insured for a percentage of the total medical costs, regardless of the provider.
2) How does indemnity insurance work?
Indemnity insurance works by reimbursing policyholders for covered medical expenses. After receiving healthcare services, the insured submits a claim to the insurance company, and reimbursement is provided based on the terms of the policy, often as a percentage of the incurred expenses.
3) What is the difference between indemnity and benefit insurance?
• Indemnity Insurance: Provides reimbursement for actual expenses incurred, typically as a percentage of the total costs. Policyholders have more freedom to choose healthcare providers.
• Benefit Insurance: Pays a fixed benefit amount regardless of the
actual expenses. It provides a predetermined benefit for specific
medical events, such as hospital stays or surgeries.
4) What is the limit of indemnity policy?
The limit of an indemnity policy in health insurance is the maximum amount the insurance company will pay for covered medical expenses within a specific period or for a particular condition. This limit is outlined in the policy terms.
5) What is the minimum indemnity period?
The minimum indemnity period in health insurance refers to the shortest duration for which coverage is provided. This period can vary among policies and is a crucial factor to consider when selecting health insurance coverage.