Don’t Let a Hospital Stay Kill Your Retirement

Why Hospital Indemnity Insurance is a No Brainer for Pennies on the Dollar!

The older we get, the more likely a hospital stay is in the cards. For most people, the older we get, the less money we have. This combination is a formula for disaster if one doesn’t plan well. With the high cost of hospitals, can your budget and retirement weather a multi-day hospital stay? If you said “No,” you are in good company. This is why hospital indemnity insurance is a no brainer, for PENNIES ON THE DOLLAR!

Let’s Look at Some Facts

Whether you have employer provided insurance, an individual plan, Medicare or Medicare Advantage, you are still responsible for co-pays and coinsurance. Therefore, you WILL have out-of-pocket costs incurred.

The University of Michigan did a 4-year study that showed the average out-of-pocket cost to a policy holder for a hospital stay who has employer insurance is $1,200; for an individual plan it’s $1,800.

Even on Medicare or Medicare Advantage, the cost can be $200 to $300 a day, depending on your plan. So a five day stay can cost you $1,000 to $1,500.

Assuming you don’t have too many episodes, a one-time cost may not put you into bankruptcy. However, the older we get, the more likely we are to have repeated hospital stays – not to forget accidents which can occur at any time.

Most retirees are on a fixed income. So an unexpected expense of $1,500 in one year can cause one to have to make compromises on food or medications. But it doesn’t have to be this way.

Hospital Indemnity Insurance

If you knew you had a huge expenditure coming that you could not afford and where given the opportunity to pay pennies on the dollar monthly, to ensure it was paid for when the eventuality came, would you want to? Sounds like a DUH question, but many people never think it through.

A heart attack, stroke, accident or cancer diagnosis can lead to hospital stays adding up into the tens-of-thousands of out-of-pocket dollars. Hospital indemnity insurance will help you pay those bills for a fraction of the cost.

How Does It Work?

Let’s say you have a $200-per-day hospital co-pay and you were in the hospital for 7 days. You will receive a bill for $1,400. Now take into consideration the additional expenses of a hospital stay (e.g. eating out, gas for the car or taxi fees), your daily expense could be more.

Depending on the plan you choose, you can receive $300 or more per day hospitalized, PAID DIRECTLY TO YOU! This is NOT paid to the hospital. So in our example, if $300 was your per Diem (daily amount paid to you), you would receive $2,100. You pay the hospital their $1,400 and the remaining $700 is yours to keep. This will help reimburse you for those other expenses you incurred. If there’s a surplus, save it for the next emergency.

While each policy is different, what you choose to cover and what you’d like to receive as a per Diem will decide the premium. Many policies start as low as $50 a month. This is a no brainer.

Can I Buy the Policy When I Get Hospitalized?

No. There are two very good reasons why you cannot.

1. Typically, there is a waiting period for a policy to be active. It could be 30 to 90 days, depending on what you selected. Since you never know when you may be hospitalized, it would not be available when you need it.
2. Insurance is a risk taken by the company and the policy holder. They gamble you will pay enough in premiums, along with everyone else, to allow them to pay your bill when the time comes. If they knew you were going into the hospital next week, this would be bad business.

Insurance is designed to be a win-win. You get to pay an affordable premium that won’t break the bank, providing much needed coverage in the event you have a catastrophic event. The insurance company is willing to charge low premiums for the prospect of having to pay a high bill, gambling it won’t have to for a long time. For this to work, it cannot knowingly take on bad business.

So there you have it! One certainty is the older we get, the more medical needs we will have. Planning for those needs in a responsible way ensures you won’t have financial difficulties in your retirement. Hospital indemnity insurance is a huge plus in your healthcare portfolio.