Youre Paid The Same No Matter What The Care Costs
In 2015, the International Federation of Health Plans found the average cost of an appendectomy in the United States to be $15,930. However, 25% of the time it found costs around $9,332 for the same procedure.F20
Carlas benefit of $12,320 will be paid no matter what. If her care only adds up to $9,332, then she keeps the rest. If her care costs more than what the plan pays, shes responsible for the rest. Thats what a hospital and doctor fixed indemnity insurance plan like Health ProtectorGuard does pays a set amount to you after a specific medical service no matter the cost.
Are There Extra Costs For Going Out
Under a fixed indemnity plan, youre not limited by a network. There are no extra costs for going out-of-network with fixed indemnity health insurance. That makes this type of plan a great option if youd like to keep your doctor or go to a specialist that isnt in-network under your regular insurance plan.
Fixed Indemnity Health Insurance Pros And Cons
As with any insurance, a fixed indemnity plan has both advantages and disadvantages. The primary benefit is you select the doctor and hospital. Some people have seen one particular doctor for years, so they dont want to make any changes. The same holds true for hospitals as individuals sometimes have a specific preference where they go.
You can also choose a specialist rather than having to go with one in-network. For people who need special care, the only way they can get the necessary treatment is by first seeing a doctor, which adds to the overall health care cost. With a fixed benefit plan, you dont need a referral from a primary physician.
Simply put, when looking at a fixed indemnity plan vs. major medical, you have a lot more freedom. With so many restrictions when it comes to health insurance, that alone makes an indemnity plan worthwhile for a lot of people.
However, you also have to think about the disadvantages of a fixed benefit plan. Often referred to as a fee for service type of policy, there are a few drawbacks. For example, of all health insurance plans, an indemnity plan is the most expensive. Not only will you pay a higher premium for a policy, but youll also have more out-of-pocket expenses.
How Does Hospital Indemnity Insurance Work
Below are other considerations regarding hospital indemnity insurance:
- Like with other types of insurance, you can buy your own individual policy or, if available, purchase through your employerâs group plan.
- There is a wide range of costs for hospital indemnity insurance. It will vary based on how much is covered, what the benefit amount will be, whether you include dependents on the policy, and whether you buy an individual or group policy. It can be as affordable as $7 a month or as much as $463.
- The policy benefit is usually based on the number of days you are hospitalized. For example, a policy that pays $250 per day will provide you a lump sum of $750 if you spend three days in the hospital. There may be a limit to how many days the policy will reimburse you for for example, a 30-day limit.
- Policies also sometimes provide an Initial Confinement Benefit. This is an amount you would receive just by being admitted before the per-day benefit is considered. For example, if in the above scenario you have an initial confinement benefit of $500, you would receive a $1,250 total benefit.
- Plans may have an optional benefit to include childbirth. Depending on the policy, a hospital indemnity policy may cover the mother’s admission to the hospital for normal labor and delivery, as well as an ill infant’s stay in a neonatal intensive care unit.
What Is Hospital Indemnity Insurance And Do I Need It
Many people get health insurance through their employers in fact, a study in 2019 indicated almost half of Americans depend on their place of employment for health insurance.1 Whether your health insurance is through your work or you purchase it privately, this coverage provides important financial protection in case you have a serious accident or sickness. People who dont have health insurance are vulnerable to falling deeply in to debt or even bankruptcy due to the high cost of health care.
People often underestimate how much medical care can cost. For example, the national average for a hospital stay is 4.5 days, at an average cost of $10,400 per day thats a total of $46,800.2 Health insurance coverage can help protect you from high, unexpected costs like this. Most health insurance will cover a hospital stay to a certain extent, but even the best health insurance coverage will have limits. You may still find yourself responsible for costs your insurance doesnt cover, particularly in the event of a long hospital stay or one requiring specialized treatment.
The number of people living paycheck to paycheck is estimated at 50-74%, and almost three in 10 adults say they have no emergency savings at all. One in four families making $150,000 or more a year report they depend on their next paycheck to keep their heads above water.3
What Is An Indemnity Plan
If you know anything about health insurance, youve probably heard of an indemnity plan. If not, thats okay, well explain it. An indemnity plan is the type of health insurance most people had before PPOs, HMOs, and other in-network plans became popular. With a fixed indemnity plan, your insurance provider pays a predetermined percentage of charges considered customary and reasonable.
Do I Need Hospital Indemnity Insurance Is It Worth It
Things to consider:
Knowing that your loved ones will be cared for when you are no longer here can contribute to your wellbeing now. Life insurance will never be cheaper than it is right now. Carpe diem! A licensed insurance agent can help you navigate your choices and build a plan according to your needs and budget.
Plan Costs And Deductibles
Indemnity insurance plans pay a portion of your medical costs at the service provider of your choice but may be subject to the deductible. The deductible in an indemnity plan may range from $100 for individuals and up to $500 on average for families and varies based on the insurance company.
Once you pay the deductible, the plan would pay for the remainder of your health insurance costs up to the maximum limits in your contract agreement.
Indemnity policies may also include co-pay or co-insurance clauses.
When Is Indemnity Health Insurance An Acceptable Alternative To A Fully
Heres a look at the advantages and disadvantages.
Many employers offer employees access to indemnity health insurance as a way to fill gaps in their health coverage. Now, as heath care plan costs increase, some employers who are priced out of the cost of traditional major medical coverage are turning to indemnity health insurance as a way to provide some type of health care coverage.
An indemnity health insurance plan often is referred to as a fee for service plan because it pays a set amount for services to health professionals and health facilities but usually after a deductible is paid. The deductible is the amount an employee is required to pay for a service before policy benefits are provided.
Once the employee covers the deductible, the plan pays the remainder of health insurance costs up to the policy limit. Employees also might have to pay a co-insurance, which is a percentage of the remaining charges after the deductible is paid. Some indemnity health policies, though, set a maximum limit on how much an insured person must pay as co-insurance.
For example, if the providers bill is $800 and the employee has a $200 deductible, the remaining $600 would be paid by insurance less the co-insurance, which in addition to the deductible would be the employees responsibility If the co-insurance is 20 percent, the employee would be required to pay $120 a total of $320.
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Fixed Indemnity Health Coverage Is A Problematic Form Of Junk Insurance
This analysis is part of the USC-Brookings Schaeffer Initiative for Health Policy, which is a partnership between Economic Studies at Brookings and the University of Southern California Schaeffer Center for Health Policy & Economics. The Initiative aims to inform the national health care debate with rigorous, evidence-based analysis leading to practical recommendations using the collaborative strengths of USC and Brookings.
Health insurance is a highly regulated product, overseen by state and federal authorities. However, todays market features a wide variety of loopholes that allow unregulated products to proliferate, which may lead many consumers to purchase inadequate coverage without realizing it and increase premiums for people who rely on traditional comprehensive coverage. One pernicious example is fixed indemnity coverage, a benefit that is exempt from regulation but often masquerades as a traditional health insurance product. Fixed indemnity products are offered in problematic and nontransparent ways in the individual market for health insurance and by employers offering coverage to their workers. However, Congress, federal regulators, and states all have options to tighten regulation of these products and prevent them from undermining health insurance consumers and markets.
Its Not Health Insurance But It Makes Health Insurance Better
Health insurance pays for specific medical services after deductible or copayment amounts are satisfied. By contrast, hospital indemnity insurance triggers payments when specific events associated with hospital visits occur.
A type of supplemental insurance, hospital indemnity plans pay out when a policyholder checks into a hospital for an overnight stay, entitling him to claim a certain amount say $250 against the policy. For each additional nights stay he can add another $250 on top. A three-day sojourn at the local infirmary would entitle him to $750 and so on.
In addition to a hospital per diem, a more robust plan might feature payments per ambulance trip, surgery or maternity visit, or increased payments for intense ailments such as stroke or cancer. Benefits can disburse in lump sums for short admittances or on a daily or weekly basis during longer visits.
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Supplement Your Health Insurance With Fixed Indemnity Coverage
As an add-on to major medical coverage, fixed indemnity insurance offers additional protection in the event of a specific injury or illness covered by the policy. This type of insurance will help to cover the out-of-pocket expenses during the year.
This type of coverage isnt guaranteed, and you may need to go through a full medical underwriting process before receiving coverage.
Fixed indemnity insurance isnt the same as major medical coverage. The covered offered may only cover specific injuries, illnesses, medical procedures, and/or drugs. In some cases, a fixed indemnity plan wont cover hospital costs at all.
Its important to understand your policy before deciding to add fixed indemnity coverage to your health insurance portfolio.
Drawbacks Of Fixed Benefit Health Policies:
While a fixed-based health plan offers a fixed pay-out for a pre-insured occurrence, there is a possibility this could negatively affect the policyholder as well. For example, a policyholder chose hospital cash cover as the fixed-benefit health plan and stipulated a limit of Rs.2,000 per day towards expenses. In the course of this policyholders hospitalisation, a total of 4 days were spent in hospital and the total bill was Rs.30,000. However, under the plan, only Rs.6,000 will be released due to the limits put on the plan at the outset .
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Is Hospital Indemnity Insurance Worth It
If you want maximum protection against unforeseeable events, you may want to consider buying all three types of coverage. This is especially true if you have a high-deductible health insurance plan that will require you to meet a large deductible before your health benefits kick in.
At the same time, if you believe you have enough emergency savings to cover what your health insurance wonât, you may not need it. This is especially true if youâre carrying a sizable balance in a health savings account .
One other factor you may want to consider is how susceptible you may be to COVID-19. According to the latest data from the Centers for Disease Control, a total of 63,152 laboratory-confirmed COVID-19-associated hospitalizations were reported as of October 17, 2020. The overall cumulative hospitalization rate was 193.7 per 100,000 population.
With the possibility of being hospitalized increasing due to COVID-19, it may be wise to consider signing up for hospital indemnity insurance during your open enrollment period, if itâs available.
Joel Palmer is a freelance writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.
Benefits Of Indemnity Based Health Plans:
Indemnity-based health plans allow flexibility when it comes to the hospital and health care professional, as they generally have tie-ups with a number of partner hospitals and medical centres. Thus policyholders can choose to visit a particular hospital or medical centre based on the type of treatment they are undergoing without having to worry about medical expenses. These plans also cover a wide range of treatments and illnesses and cover the actual amount of the hospital bill.
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Preventative Health Care Services
Some indemnity health insurance plans may not cover preventative services, while others do. Preventative health care services include yearly check-up exams and other routine office visits that are designed to prevent illnesses. Before selecting a health plan, be sure and discuss how preventative services are insured, and how much compensation you can expect. This will help you make the choice for the best possible plan. In some cases, costs of these services may not count towards your deductible.
Need More Help For The Unexpected
Bundle Fixed Indemnity Insurance with Critical Illness or Accident InsuranceF21
Accident Pro Insurance
Accident Pro Series products combine accident insurance with critical illness and accidental death benefits to help cover some surprise medical costs.
Worried about paying the bills if you fall ill? Critical illness insurance helps with a lump sum cash benefit following the diagnosis of a qualifying illness.
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Product availability varies by state.
Covering Your Medical Bills
There are a variety of fixed indemnity plans on the market, and their benefits vary drastically in how much they cover. The biggest concern with fixed indemnity plans is that they don’t cap out-of-pocket costs, and the amount they pay is based on their fee schedule, not based on the actual cost of the care that the patient receives.
It’s common to see fixed indemnity plans that will pay between $1,000 and $5,000 per day for an inpatient hospitalization, a few hundred dollars for emergency room care, up to several thousand dollars for surgery, and perhaps $100 per physician visit while the patient is hospitalized. These sound like a decent amount until you realize how high hospital bills can get, no matter how brief the visit.
For instance, let’s say a person has a high-end fixed indemnity plan, with a $5,000 per day hospitalization benefit and $10,000 surgery benefit. If a badly broken leg results in a brief hospital stay and surgery and a total medical bill of $70,000, the amount the fixed indemnity plan will pay is not much in comparison. Part of the problem is that people are often unaware of just how high medical bills are when they’re not covered by insurance that caps the patient’s out-of-pocket costs.
How Much Does Fixed Indemnity Health Insurance Cost
- Premiums: Fixed indemnity health insurance typically come with low premiums. These premiums vary but are often as low as $25 per month. Since these plans are usually supplementing major medical plans, this cost is in addition to the monthly premium you, or your employer, already pay. Some plans may agree to accept lower premiums in exchange for fewer cash benefits.
- Deductibles: Most fixed indemnity plans carry no yearly deductible. You receive a cash benefit without having to pay towards the medical bill yourself.
- Coinsurance: There is no coinsurance for fixed indemnity health insurance.
- Copay: There is no copay required under a fixed indemnity plan.
While fixed indemnity health insurance is fairly cheap, its important to remember that theyre often used as supplemental insurance to an existing major medical plan that you already have.
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Indemnity Plans Vs Hmos And Ppos
Unlike HMO and PPO health insurance plans, most indemnity policies allow you to choose any doctor, specialist and hospital that you wish when seeking health care services.
Indemnity plans are considered fee-for-service health insurance plans where you have the freedom to choose your health care services and as long as your services are eligible you may be charged a fee depending on how your policy rules are written. Sometimes indemnity health insurance plans cost more than HMOs and PPOs, but the payoff is the flexibility of choices.
How Does An Indemnity Plan Work
Under an Indemnity plan, you may see whatever doctors or specialists you like, with no referrals required. Though you may choose to get the majority of your basic care from a single doctor, your insurance company will not require you to choose a primary care physician. An Indemnity plan may also require that you pay up front for services and then submit a claim to the insurance company for reimbursement.
You’ll likely be required to pay an annual deductible before the insurance company begins to pay on your claims. Once your deductible has been met, the insurance company will typically pay your claims at a set percentage of the “usual, customary and reasonable rate” for the service. The UCR rate is the amount that healthcare providers in your area typically charge for any given service.
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