How Does Hospital Indemnity Insurance Work?
No one wants to end up in the hospital. Despite hospitals being a healthcare hub full of solutions for most ailments that people experience, most of us avoid going to them at all costs. This is often due to the fact that it can be prohibitively expensive to access hospital services, particularly if people have little to no insurance. However, hospital indemnity insurance is one solution to this problem.
What is Indemnity Insurance?
One of the most common forms of insurance, including hospitalization insurance, is called indemnity insurance. Indemnity insurance is also called fee-for-service. Policyholders can use any doctor or hospital, they are not confined to a network. Either the beneficiary or the service provider sends the bill to the insurance company, who then reimburses the holder or the provider. Typically, there is a deductible that the beneficiary must meet before the insurance starts to kick in. Then, the insurer usually pays a certain percentage of the “usual and customary” costs from the services. This percentage is usually around 80%, and usual and customary fees are healthcare field standards for what something usually costs. These indemnity plans may not pay for preventative care.
Hospital Indemnity Insurance
Now, hospital indemnity insurance functions as most indemnity insurance policies do. It is a supplemental insurance plan that is supposed to pay for the hospital admissions costs that are not covered by other standard policies. Because the majority of Americans do not have the savings to cover unplanned medical bills, this can be a very useful financial safety net if someone is admitted to the hospital or the ICU due to injury or illness. The payments from the insurance company can be used to cover any of the costs associated with the hospital admission, including copays, deductibles, and even food, rent, or other bills.
There are also guaranteed issue policies that require no disclosure of medical history in order to enroll. One of the major differences between standard insurance policies and indemnity policies is to whom the payments are made. Indemnity insurance policies for hospitalization make payments directly to the hospitalized person, the policy holder, rather than the hospital. This allows for much more flexibility as to where the money goes and how it is used.
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