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Medical expenses can crush your family finances

Hospital visits can cost a lot of money. A broken leg can cost up to $7,500. A three-day hospital stay is around $30,000. Cancer treatment can cost hundreds of thousands of dollars.

Yes, medical insurance will help a great deal, but deductibles, co-pays and out of pocket expenses can still be significant.

Consumers have an insurance product that can help with these expenses – hospital indemnity. It helps pay for costs of hospital admission, ambulance transportation, emergency room visits, intensive care stays and more.

“With the implementation of the ACA, the uninsured rate has dropped significantly,” said Steve Hesler, assistant vice president for product and market development at Colonial Life. “The root problem however, is not with the number of Americans covered but with the large amount cost-shifting that is taking place by employers through the use of higher deductibles, coinsurance and copay amounts which are implemented in order to combat rising health insurance premiums.”

Even for people who are confident in their savings, hospital indemnity protects their finances right now – so they have something left for the future.

So how does it work? Here’s an example, using a 30-year-old woman who just had emergency gallbladder surgery with complications that resulted in a five-day hospital stay. Even with medical coverage, she may incur significant out-of-pocket expenses, including:

  • $100 emergency room co-pay
  • $1,000 deductible
  • $1,000 co-insurance for surgery ($5,000 x 20%)
  • $2,000 for hospital stay ($10,000 x 20%)

For illustration, a lump sum hospital indemnity policy may pay these benefits:

  • $150 emergency room visit
  • $1,500 hospital admission benefit
  • $500 diagnostic procedure benefit
  • $1,000 inpatient surgical procedure benefit
  • $500 daily hospital confinement benefit ($100 x five days)

A recent study by the nonprofit Kaiser Family Foundation and the Health Research Foundation found that the average deductible that workers must pay before their health insurance kicks in has more than tripled from $303 in 2006 to $1,077 in 2015.

Hospital indemnity insurance can work as a complement to any core medical plan. The cost of this coverage will vary. Coverage may be as little as $5 per month or considerably higher, depending on your age and features of the plan.

Many hospital indemnity products also come with a wellness benefit – an annual payment of $50, $75 or $100, if you complete a qualified health exam like a pap smear, mammogram, prostate screening or cholesterol check. This can help offset the cost of the coverage while also promoting early detection of potentially serious health conditions.

“Hospital indemnity insurance pays the beneficiary directly,” Hesler said. “Because it is financial protection and not health insurance, the beneficiary retains control over the cash payment to put it towards whatever is most pressing such as deductibles, child care, being out of work or any other need.”

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