Have you ever spent time in the hospital? If so, you’re probably familiar with the shock of receiving the bill afterward. Even with insurance, copays, deductibles, and other out-of-pocket expenses can easily reach thousands of dollars for a multi-day hospital stay.
Luckily, there’s a relatively affordable insurance option that can help cover these costly bills. It’s called hospital indemnity insurance.
Hospital indemnity insurance provides cash benefits when you’re hospitalized to cover copays, deductibles and other out-of-pocket expenses. This supplemental coverage pays a fixed dollar amount for each day you’re inpatient at the hospital, up to a maximum benefit amount.
Premium rates for hospital indemnity insurance can vary quite a bit depending on your age, health status and other factors. So it’s important to understand what impacts your rates when shopping for a policy.
This article provides an in-depth look at hospital indemnity insurance rates, key factors that impact premiums, and tips for getting the best rate.
About the Hospital Indemnity Insurance
Hospital indemnity insurance provides financial assistance to help cover out-of-pocket medical costs associated with a hospital stay. This type of insurance pays a fixed dollar amount for certain hospital-related expenses, regardless of the actual costs incurred. With rising healthcare costs, hospital indemnity insurance can provide a buffer against expensive hospital bills.
Hospital stays can be incredibly expensive in today’s healthcare system. The average cost for a 3-day hospital stay is around $30,000 in the United States. Even with health insurance, out-of-pocket costs like deductibles and copays can easily reach thousands of dollars.
Hospital indemnity insurance provides supplementary coverage to help cover these out-of-pocket expenses associated with a hospitalization. This type of insurance pays a fixed dollar amount for each day you are hospitalized, up to a maximum benefit amount. Many policies also include additional benefits for things like hospital observation stays, ambulance transportation, and hospital intensive care unit (ICU) confinement.
When shopping for hospital indemnity insurance, premium rates can vary quite a bit among insurers. Rates are based on factors like your age, health status, selected coverage, and more. Having a good understanding of how these factors impact your premium can help you find the most cost-effective hospital indemnity coverage.
What Factors Determine Your Hospital Indemnity Insurance Premiums?
Insurance companies use several pieces of information to calculate your personalized premium rate for hospital indemnity coverage. Some key factors that impact hospital indemnity insurance rates include:
Age – Age is one of the biggest rating factors for hospital indemnity premiums. Older individuals are more likely to be hospitalized and file claims. As such, premium rates increase progressively with age. A 50-year old will pay around double the rate of a 25-year old for the same coverage.
Gender – Historically, women have had higher hospitalization rates which led to higher premiums. However, due to the Affordable Care Act, insurers can no longer consider gender when setting rates. Now, hospital indemnity insurance rates are gender neutral.
Health status – Your current health and medical history also affects your rates. Applicants undergo medical underwriting where they answer questions about any pre-existing conditions. Those with serious health conditions often pay higher premiums or may be denied coverage.
Daily benefit amount – The higher your elected daily benefit amount, the higher your premiums. $200 per day coverage costs more than $100 per day coverage. Benefit add-ons like ICU coverage also increase rates.
Benefit period – Most policies have a maximum benefit period of 30 days. However, you can select shorter or longer benefit periods which alters rates. A 15-day benefit period reduces rates compared to a 30-day option.
Deductible – Some insurers allow you to select a deductible, anywhere from 0 to 30 days typically. Choosing a longer deductible lowers premiums but delays payouts.
Optional riders – Additional riders like disability income or accident medical expense benefits increase rates but provide more robust coverage.
Family coverage – Adding your spouse and dependents raises rates but provides protection for the whole family. Family plans costs about 2.5 times the rate of employee-only coverage.
Consider how these various factors relate to your situation as you evaluate hospital indemnity insurance rates. Shopping strategically can help you land the optimal mix of premium affordability and coverage value.
Tips for Getting the Best Hospital Indemnity Insurance Rates
Here are some top tips for getting the lowest premiums on hospital indemnity coverage while still securing suitable benefits:
- Comparison shop – Get quotes from several highly rated insurers. Rates can vary significantly between companies for the exact same coverage.
- Take good care of your health – Maintaining well-controlled medical conditions and a healthy lifestyle helps minimize premiums.
- Consider benefit trade-offs – Higher deductibles and lower daily benefits reduce costs. Evaluate the savings versus reduced payout potential.
- Buy during open enrollment – Many employers and associations offer hospital indemnity plans during annual open enrollment. This is the best time to sign up or make coverage changes.
- Choose annual premium payments – Most insurers give a discount for paying the full policy premium in one annual payment rather than monthly installments.
- Raise your deductible – Assuming you have adequate emergency savings, a higher hospital indemnity deductible can make premiums more affordable.
- Review discounts – See if you qualify for multi-policy, good health, or group member discounts from the insurer.
Frequently Asked Questions about Hospital Indemnity Insurance Rates
Here are answers to some common questions regarding hospital indemnity insurance rates and premiums:
How much does hospital indemnity insurance cost per month?
Typical monthly costs range from $25 to $60 for single coverage at benefit levels between $100 to $300 per day. Family coverage and higher benefit amounts increase monthly costs, but usually do not exceed $150 per month.
What factors make hospital indemnity rates higher?
Older age, poor health status, high benefit levels, additional riders, family coverage, and shorter deductibles lead to higher premium rates. Gender and tobacco use no longer impact rates.
How can I get the cheapest hospital indemnity insurance rates?
Getting quotes from multiple carriers, opting for higher deductibles and lower benefits, maintaining good health, and paying annually instead of monthly will help reduce premium costs.
Can my rate change over time if I keep renewing coverage?
Yes, your hospital indemnity premium can increase at policy renewal as you age and healthcare costs rise. However, the insurer cannot single you out for rate hikes based on claims.
Is there an advantage to buying this coverage earlier in life?
Yes, hospital indemnity rates will be lowest when you are young and healthy. Buying coverage in your 20s or 30s locks in lower premiums for the long run.
Hospital indemnity insurance can be an important supplement to major medical coverage. Understanding typical rates, from around $25 to $150 monthly, provides useful context when evaluating plans.
Shopping strategically and selecting optimal benefit levels allows you to balance premium affordability with value of protection.
While each individual’s rates will vary, the peace of mind provided by hospital indemnity insurance offers most people an advantage worth the reasonable costs.
- 10 Tips for Purchasing Commercial Property Insurance
- Business Insurance Small: How Small Business Insurance Works
- Hartford Business Insurance: Why Do Businesses Need Insurance in Hartford, CT?
- Insurance Telemarketing: Keys to Successful Insurance Telemarketing
- Rental Car Insurance Coverage: Why Rental Car Insurance Matters