Critical Illness as a Supplement to Hospital Indemnity
December 10, 2014| Von Steve Rowley
Hospital stays are expensive and getting more costly each year. Deductibles, co-pays, non-covered expenses and out-of-network treatment can be unmanageable. For many people in the U.S., "out-of-pocket" translates to "out-of-money." What's worse is that this too often means "out-of-options" for securing essential life saving treatment.
Hospital Indemnity insurance is one way that individuals help to protect themselves from the often enormous cost of hospital-based healthcare. The coverage available through these plans can vary considerably, but generally involves a cash payment when hospital services are utilized. A typical plan might provide benefits for hospital admissions, outpatient surgery and even for limited skilled nursing needs following a hospital discharge. The consumer can select from a range of daily benefits. Additionally, these may vary based on the type of care - for instance, payments while in an Intensive Care Unit may be twice those paid under a normal hospital admission.
Insureds are free to use these funds as they feel appropriate to help offset basic expenses ranging from co-pays and deductibles to pharmaceuticals. Proceeds can even be used to help with the cost of non-medical expenses, such as hospital incidentals, private rooms, transportation and lodging for family members, or even childcare.
Hospital Indemnity plans offer much needed and very affordable coverage. But that coverage is far from comprehensive. Few illnesses require long hospital stays but many require long periods of ongoing and expensive treatment outside of the hospital.
Consider the normal course of treatment for metastatic cancer. This would typically involve a few days, maybe even a week, of hospital confinement followed by months of radiation and/or chemotherapy treatment. Or think of the stroke patient who may require a longer initial hospital stay but still require an extended period of outpatient speech and physical therapy. How are these individuals being served by a Hospital Indemnity plan? What portion of their total out-of-pocket expenses will be covered?
The good news is that insureds who have purchased Hospital Indemnity insurance have already made an important step. They understand the inherent limitations of their health insurance plan. They know that they are at increased financial risk should they experience anything worse than routine office visits or treatment for minor illness or injury. These individuals are ideally suited to understand the value and importance of a plan that provides them with a meaningful cash benefit when something truly catastrophic occurs.
Critical Illness insurance pays a lump sum benefit, normally between $10,000 and $100,000, upon diagnosis of cancer, heart attack, stroke, kidney failure, major organ transplant and, depending on the contract, a number of other serious illnesses. These payments are not limited by, or tied to hospitalization or a certain type of treatment, but to the diagnosis of the actual illness itself.
Critical Illness and Hospital Indemnity are ideal complementary products. Both provide important financial protection and may increase the number and scope of treatment options when serious illness occurs. An insured who has purchased one of these products has demonstrated both an understanding of the financial exposure and a willingness to take action to reduce that risk. As such, this person is an ideal candidate for the other product.