People buy health insurance to protect them in the event of a big medical claim. Unfortunately, with today’s rising deductibles and out-of-pocket limits, which will be $7,500 for HSA-qualified plans and $9,100 for non-HSA plans in 2023, despite its name, major medical health insurance alone isn’t enough for many people. Even with insurance protection, a huge percentage of Americans will have trouble paying their share of the bills.
In fact, a recent Bankrate survey found that “Only about 4 in 10 Americans have enough savings to cover an unplanned expense of $1,000, meaning more than half would need to find other means to pay for an unexpected car repair or emergency room visit.”
That may explain why we’ve seen a surge in hospital indemnity plans in the last couple years. A May 2021 survey by Willis Towers Watson found that the COVID-19 “pandemic is driving more employers to offer voluntary benefits, with nearly all employers (94%) expecting these employee-pay-all or unsubsidized benefits to hold great importance in their organizations during the next three years.”
According to the survey, 42 percent of employers offered hospital indemnity plans in 2021, but 65 percent expected to offer these plans by 2022 or beyond. That’s a huge increase.
What a lot of brokers may not realize, though, is that hospital indemnity coverage is also available to your individual clients; it does not have to be offered on a group basis. In fact, AHCP has a number of hospital indemnity solutions available on the carriers page of our website, including plans from LifeSecure, National General, and UnitedHealthOne. Please reach out to our broker support team for more information.
Hospital indemnity plans usually pay a fixed amount per day when an individual visits the emergency room or is admitted to the hospital, and this type of coverage can help to offset the rapidly rising costs for inpatient care. According to Healthcare.gov, “the average cost of a 3-day hospital stay is around $30,000.” Even after accounting for the negotiated rates insurance carriers have with their in-network facilities, many members quickly hit their plan’s out-of-pocket limit, leaving them with thousands of dollars in bills.
An indemnity plan can help to pay a portion of this cost. It may be helpful to think of a hospital indemnity plan as insurance for your insurance; they can offset some of the member’s deductible and coinsurance exposure in today’s health plans. Together, a major medical plan and a hospital indemnity plan can help make your clients whole in the event of a major illness or injury.
And, because most of these plans pay a fixed cost per day or per admission rather than a percentage of the deductible, they usually do not disqualify someone with a high deductible health plan from contributing to a Health Savings Account.
Most people would love to have a health insurance policy that covers all of their medical expenses. Unfortunately, these sorts of policies don’t exist anymore, and even if they did, most people could not afford them. However, by piecing together different solutions, we can offer our clients a comprehensive solution that will minimize their out-of-pocket costs and provide them the peace of mind that comes with knowing their family is taken care of.