Between 2018 and 2019, total Medicare Advantage (“MA”) enrollment grew by nearly 1.6 million beneficiaries (Kaiser Family Foundation). In fact, the Congressional Budget Office projects that about 47% of Medicare beneficiaries will be enrolled in a MA plan by 2029. Medicare Advantage’s increasing share of the market could be partly attributed to the fact that half of Medicare Advantage enrollees paid no premium, other than part B, in 2019 (Kaiser Family Foundation).
While MA Plans have $0 to low monthly premiums, enrollees might still incur out-of-pocket costs. If an MA enrollee goes to the hospital, they might be expected to pay a daily co-pay (or a co-pay for a limited number of days). Hospital Indemnity (“HI”) coverage pays a cash benefit for each day an insured individual is in the hospital. Early versions of HI paid either a fixed amount for specific diseases or medical procedures or a percentage of the provider’s fee. If the policy covered the service, the insurance provider was responsible for reimbursing (indemnifying) the patient. Though slightly different these days, Hospital Indemnity is still not based on a network of contracted providers.
- Benefits are disbursed weekly or even daily – Benefits are paid directly to the policyholder (unless designated otherwise), weekly or even daily for certain products and depending on the length of the hospital stay.
- Benefits can be used to pay deductibles, or other costs – Benefits can be used however the recipient wants whether it’s covering co-pays, deductibles, or other expenses not covered by the insured’s other plan(s).
- HI plans are not beholden to hospital networks – Because hospital indemnity plans pay cash benefits directly to the policyholder, coverage is not determined by hospital networks.
- Plans often have riders that cover costs like ambulance rides – Several hospital indemnity plans offer optional riders that cover things like ambulance costs, outpatient radiology and observation confinement.
- It’s inexpensive – Hospital indemnity plans are typically very affordable. Most people pay anywhere from $15 to $40 a month for their plan, less than that daily cup of coffee or a nice lunch out.