If you have a Medicare Advantage plan, it's probably because there is no monthly premium. But remember, there will be a charge when you need medical care. There is an easy and inexpensive way to make sure you are protected from these costs.The monthly premiums are low on Advantage plans because it is a “pay as you go” type of plan. So, when you use the plan, you will be charged. Sometimes the co-pays are low, like the amount you pay to visit the doctor. Other times the co-pays can be substantial, like when you go in to the hospital.
One way to protect yourself from the high cost of inpatient stays is to have a hospital indemnity plan.
What is hospital indemnity insurance?
Hospital indemnity plans pay a predetermined amount for each day you are confined to a hospital. You choose the benefit amount when you set up the plan. Then, after a hospital stay, the benefit amount is paid directly to you. You can use the money on whatever you want. The monthly premium for a plan like this is very low in comparison to what you could pay if you need inpatient care. Usually, plans in this area range from $15 - $40 per month.
Let’s assume you are 66, have a Medicare Advantage plan, and are in good health. Your monthly premium for the Advantage plan is $0 but your inpatient copay is approximately $275 per day. (Your specific amount can be found in your Summary of Benefits.)
If you had an unexpected illness and stayed in the hospital for 4 days, the cost to you would be $1,100.
$275 per day X 4 days = $1,100
Now, let's say you also have a hospital indemnity plan that has a $300 per day benefit. In the scenario above, the insurance company would pay you $1,200.
$300 benefit amount x 4 days in the hospital = $1,200
You can use the $1,200 from the indemnity plan to pay the hospital co-pays of $1,100 and still have a little money left over for prescriptions, deductibles, etc.
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Often hospital plans offer additional riders that will pay set amounts for days in skilled nursing rooms, ambulance co-pays, outpatient surgery co-pays, etc.
Keep in mind
- This is not an accidental plan or a disability plan. It is not meant to pay a lump sum if you pass away in an accident or to replace income long term. This plan only pays for inpatient hospital stays and any rider benefits you have added.
- This plan can benefit anyone, not only those on Medicare.
- This plan is separate from your medical insurance.
- Read the fine print. These plans pay if you are considered inpatient not in an observation status.
If you would like help designing a plan that works for you, contact our licensed insurance agents for a review.