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How Hospital Indemnity insurance fills Medicare Advantage gaps

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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 insurance 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 National Library of Medicine reports that individuals 65 and older accounted for 13.2 million hospitalizations. The average cost per stay for seniors ranked high, with around $2,847 per day. 

In 2023, the out-of-pocket maximum for Medicare Advantage plans is $8,300 for in-network services. 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. It’s wise to look at your Medicare Advantage plan to know what your insurance covers and then ask 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, keep 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 number 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 2019, the average daily cost for a shared room in a skilled nursing facility was $245. 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. 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 Wellabe’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 866-739-8143 to speak with an agent.

Photo credit: iStock

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