How Hospital Indemnity Insurance Fills Medicare Advantage Gaps

Hospital Indemnity insurance pairs well with high-deductible plans, like Medicare Advantage

You did your part. You signed up for a Medicare Advantage (MA) plan during the annual enrollment period, and now you should be set for medical coverage for the year, right? Not necessarily. As you start to use your MA plan, you might notice that its coverage has some gaps and it’s not fulfilling your specific needs, especially if you visit the hospital.
If that’s your situation, you have a couple choices: you can use the Open Enrollment Period to switch MA plans or sign up for Original Medicare before the end of March, or you can purchase supplemental products to support your MA plan.
Hospital Indemnity insurance is a supplemental plan that can help relieve out-of-pocket costs if you have an expensive, unplanned hospital stay. This type of hospital insurance has become increasingly popular as hospitalization costs have soared. The Agency for Healthcare Research and Quality reports individuals aged 65 to 84 accounted for almost 30 percent of all inpatient hospital stays in 2016. The average cost per stay for these seniors outranked the other groups — $14,500 for an average visit of five nights. And MA plans don’t cover the entire cost.
“With Medicare Advantage plans, the maximum out-of-pocket cost is $6,700. This is a large sum of money to many who are solely utilizing retirement income, whether Social Security or savings,” says Erin Bueltel, product specialist for Medico Insurance Company.
This amount doesn’t take into account coverage gaps that may present before, during, or after a hospital stay that add to your total expenses. Bueltel suggests looking at your Medicare Advantage plan to know what your insurance covers and then asking yourself: “If I were to be hospitalized, have health issues, or need surgery, can I afford at this moment to pay the out-of-pocket cost?”

If your answer is “no,” consider Hospital Indemnity insurance. And even if it’s “yes” now, Bueltel suggests keeping an eye out for increasing out-of-pocket expenses down the road because MA plans can change every year.

What is Hospital Indemnity insurance?

Hospital Indemnity insurance provides flexible supplemental coverage to major medical, Medicare, and Medicare Advantage plans. As a policyholder, you choose a plan based on a specified, fixed-amount benefit for each day you’re confined to a hospital as a result of a covered sickness or injury. You typically choose a per-day cash benefit amount and a benefit period, which is the maximum numbers of days the policy will pay. There’s generally no deductible or limited provider network, and benefits can be spent in whatever way you choose, from medical bills to household expenses.

What sets each Hospital Indemnity insurance plan apart is the added benefits and riders that pay for services beyond hospital confinement. These benefits are often available at no additional charge and offer extra value, especially if you have a high-deductible plan like Medicare Advantage. The benefits that are sometimes added to a Hospital Indemnity plan typically cover one of four service categories: services provided before, during, and after inpatient hospitalization, or services provided during outpatient hospitalization.

Before hospitalization

A visit to urgent care, transport by ambulance, and emergency room services may precede inpatient hospitalization. Some Hospital Indemnity plans provide a lump-sum cash benefit for each.

During hospitalization

In addition to paying a benefit for hospital confinement, some Hospital Indemnity plans also pay a daily cash benefit for transportation and lodging while you’re receiving inpatient or outpatient treatment at a hospital that is not near your home. This benefit can reduce the stress of an already stressful situation by allowing your family members to be near while you’re receiving treatment.

After hospitalization

You may need additional services after you’ve been discharged from the hospital to get back on your feet. These may include outpatient physical, speech, or occupational therapy or skilled nursing care. In 2017, the average daily cost for a shared room in a skilled nursing facility was $227. This adds up fast when you need assistance for multiple days. Some Hospital Indemnity plans offer optional riders that pay cash benefits for these services.

During outpatient hospitalization

In recent years, rules from the Centers for Medicare & Medicaid Services (CMS) and financial incentives have made it increasingly common for hospitals to place patients under observation when they’re expected to need less than two nights of medically necessary care. Medicare and most Medicare Advantage plans recognize observation care as an outpatient service and pay benefits differently than for inpatient services. Bueltel cautions that you may not be aware you’re under observation. That’s why it’s important to find a Hospital Indemnity plan that will pay the same per-day benefit for observation and inpatient services, even when you receive observation care, then leave the hospital without inpatient admission.
To learn how Medico’s Hospital Indemnity plan can help fill your coverage gaps and if it’s available in your state, visit the Hospital Indemnity page. You may also request a personalized, free quote, or call 877-257-2663 to speak with an agent.
This article may contain links to third party websites, but Medico is neither responsible nor liable for their content, accuracy, or security. Review our Terms and Conditions to learn more.

Photo credit: iStock

Understanding How Hospital Indemnity Complements Medicare Advantage Plans

Learn how Hospital Indemnity insurance can cover gaps in a Medicare Advantage plan while protecting your savings.

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