July 30, 2019

What Goes Around Comes Around

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

After many years of experience in the life & health & annuity insurance business, I’ve come to the conclusion of ‘what goes around comes around.’ Years ago we had the availability of a hospital expense insurance policy. As titled – when hospitalized – some named expenses would be paid by these plans in the event of that hospitalization – normally an extended hospitalization. Years ago in selling disability insurance I never saw the need for these hospital expense plans and kind of snubbed nose at these plans thinking normal major medical – either individual or group – would provide for major medical costs. Plus disability income insurance was available. Consequently, a specialized hospital expense policy was somewhat infantile.

Fast forward to today and what do we have with major medical insurance – both individual and group major medical insurance? Today’s deductibles on major medical insurance are considerably higher in order to minimize premium and affordability. It is common today to have $6,000 deductible per person or twice that for spousal and family coverage. Years ago those high deductibles just didn’t exist as they do today. Well – as we all know high deductibles are here and here to stay. AND $6,000 deductible is considered normal. But remember that’s for an individual. Family coverage may easily be twice or thrice that number. The reality is today’s families may easily amass considerable debt with a ‘simple’ overnight hospital stay and/or emergency room visit. Here enters the need for what I snubbed years ago……the Hospital Indemnity Plans.

These plans may have renewed popularity within today’s world. For the under age 65 (pre-Medicare) folks – trends are to acquire higher deductible plans to help lower the cost of insurance. That’s an approach that’s been around a long time….and it seems to be a wonderful approach – it does lower the monthly premium on major medical insurance. Standard deductible for an under 65 individual today is $6,000 for an under age 65 individual. That deductible can be easily doubled or tripled with family coverage. That all sounds
reasonable from a premium perspective but from a claim
perspective certainly not as attractive.

For the Medicare person – age 65 or over – today’s trend is to acquire a Medicare Advantage Plan. Premium for Medicare Advantage Plans are considerably lower than with traditional Medicare with a supplement and prescription drug plan. That sounds attractive from the premium perspective but remember the out of pocket costs for Medicare Advantage Plan holders can be considerable.

This is the place for those Hospital Indemnity Plans. That place is to provide additional income to help with those deductibles or other out of pocket costs. What do you know about Hospital Indemnity Plans? Let’s start by answering the question “What is a Hospital Indemnity Plan?” A Hospital Indemnity Plan is a supplemental plan providing coverage for out of pocket costs not covered by current insurance such as a high deductible for the under 65 person/family while hospitalized. Further copayments and coinsurances for Medicare folks especially Medicare Advantage Plan holders rack up a considerable debt.

Hospital Indemnity Plans are NOT major medical insurance plans to pay medical costs but provide a benefit that is either paid as a lump sum or daily benefit. When admitted to the hospital most of these plans help cover the cost of being ‘under observation’ as well as ‘inpatient.’ It’s worth checking into these plans to help protect our assets – If you are a regular reader – Hospital Indemnity Plans may help protect your wheelbarrow.

Our monthly Community Meetings continue for persons aging into Medicare. Check our ad for August 20 & 22.

Richard J. Schillig, CLU, ChFC, LUTCF is an Independent Insurance and Financial Advisor with RJS and Associates, Inc. He can be reached at (563) 332-2200.

Filed Under: Finance