What is an Indemnity Plan?
A hospital indemnity plan is a type of health insurance coverage that pays a set amount for hospital services. While it is not a substitute for major medical coverage, it can provide additional financial protection in the event of an unexpected hospital stay or other medical emergency.
Hospital indemnity plans are often purchased as an add–on to a major medical insurance plan. In turn they provide additional financial protection in the event of an unexpected hospital stay. For example, a hospital indemnity plan may pay a set amount for each day spent in the hospital. Alternatively, it could pay a lump sum if the insured is admitted to the hospital.
How do indemnity plans work?
- A hospital indemnity plan pays out a fixed amount for certain medical expenses. It will pay for services such as hospital stays, surgery, or doctor visits. The amount of money paid out depends on the type of medical care being provided and the plan’s coverage limits.
- Usually, the beneficiary of a hospital indemnity plan must submit claims for reimbursement to the insurer. The insurer then reviews the claim and sends a payment to the insured.
- Some hospital indemnity plans have a deductible. For example, if a plan has a $500 deductible, the beneficiary would need to pay the first $500 of eligible medical expenses before the plan would cover any of the remaining costs.
- Some hospital indemnity plans also have coinsurance.
- Many hospital indemnity plans also include additional benefits. These range from prescription drug coverage, mental health coverage, and coverage for home health care . The coverage limits and additional benefits vary from plan to plan, so it’s important to read the policy carefully.
How much do these plans cost?
The average cost of a hospital indemnity plan varies depending on the provider, and the type and level of coverage purchased. Generally, these plans cost between $20 and $50 per month. If you work with a broker at LMS, we can shop around different rates and find the coverage that is perfect for you.