Should You Consider Hospital Indemnity Insurance?
No one anticipates a lengthy hospital stay. Why would we? Our natural optimism bias leads us to believe “it won’t happen to me”. It might happen to someone else, but not me. Optimism bias transcends gender, ethnicity, nationality, and age. It is so common, in fact, that studies show 80% of all humans suffer from optimism bias!
Optimism bias is the belief that each of us is more likely to experience good outcomes and less likely to experience bad outcomes. The key to optimism bias is that we disregard the reality of an overall situation because we think we are excluded from the potential negative effects.
Despite our optimism, people of all ages still find themselves in a hospital due to an unforeseen injury or health crisis. The American Hospital Association reports over 36 million people are admitted to the hospital each year. Even more alarming, the average out-of-pocket cost for a hospital stay increased 14% in 2018, with costs projected to continue rising. This upward trend is true for all patients: self-pay, commercially insured or Medicare patients, including those with Medicare Advantage. A hospital stay can strain even the healthiest budget. This is where a hospital indemnity plan can help.
What Is It?
Hospital Indemnity plans offset hospitalization expenses not covered by existing health insurance. Out-of-pocket expenses such as copays, plan deductibles or out-of-network care can add up fast. Hospital indemnity plans pay cash benefits each day you are confined to a hospital. This includes both planned and unplanned hospital stays.
Consider This Scenario
To better understand Hospital Indemnity Guarantee Trust Life (GTL) describes this hypothetical situation:
Brian is 65 years old and on Medicare Advantage (MA).
MA coverage leaves Brian responsible for a hospitalization copay of $250/day for the first five days.
This high copay concerns Brian.
GTL offers a solution. Their Advantage Plus Hospital Confinement Indemnity Insurance provides a restorable 6-day benefit period of $250/day for $22.64 a month.
Brian suffered an illness that kept him in the hospital for five days.
After the first 12 hours in the hospital, Brian’s hospital indemnity coverage kicked in.
This five-day hospital stay would have cost Brian $1,250 with his MA plan.
Luckily, Brian’s hospital indemnity benefit was paid directly to him and completely covered the cost.
So instead of worrying about how to pay this large bill, Brian focused on his recovery without a financial setback.
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