Hospital Indemnity

Hospital indemnity insurance is a type of supplemental health insurance that provides a cash benefit to policyholders when they are hospitalized for a covered illness or injury. 

How does it work?

There are companies that guarantee issues between ages of 60 and 79yrs, so there is no qualification process in that regard. However, there is a pre-existing condition clause of six months that precludes using the policy for anything that is currently happening in your life. For example, a hospital stay due to diabetes would not be covered for the first six months; but after the initial time period, it would be covered for as long as the policy is in place. Cataract surgery or removal of topical skin cancers also fall under pre-existing conditions for the first six months. On the other hand, if you were in a car accident two days after you signed up for the policy, the resulting hospital stay would be covered since that would be considered a new event.

How much does it cost?

Hospital indemnity is quite reasonable; the average policy for a 65-year-old is $28-$35 less than what you would spend at Starbucks per month. For the typical senior, when paired with an Advantage plan, it takes the majority of high copays out. You will still pay the small copay to see your doctor, for imaging costs and of course drug costs. But, for the most part all the other major events are covered. This is a great way to make sure you have little-to-no unexpected costs, and in some cases you may even get money back!

How would you get money back?

Here's a typical example of how many of my clients might receive extra money from the policy:My client hurt themself playing pickleball and their doctor tells them they need to try Physical Therapy. Their advantage plan charges $25 to see a specialist, so every time they go to Physical Therapy they are charged a $25 copay. The hospital Indemnity plan has a rider for Physical Therapy for up to 30 visits a year and they pay up to $50 a visit. When my client goes to PT, they show them their Insurance card and the Hospital Indemnity card. The Hospital Indemnity company then pays the PT office $25 per visit and sends the client a check for $25 per visit up to 30 times! 

Are there rate changes?

No, but the younger you buy the lower the cost. However, whatever price you purchase at that is the premium that you pay as long as you keep the policy.

What if I change my advantage plan?

The Hospital Indemnity Insurance will work with whatever Medicare plan that you are currently on. The amounts for each item are set when you purchase the policy, so if the co-pays are higher than your Hospital Indemnity the policy will pay out the amount that it was written up for, and you will pay the difference. For example, if your new Advantage Plan has a co-pay of $200 a day on hospital stays but your original policy was written for $175 a day, you would be responsible for the additional $25 a day. However, if your new Advantage Plan has a $150copay for hospitalization per day, then the Indemnity Plan would pay the $150 to the hospital and mail you a $25 check per day admitted.