Demand grows for hospital indemnity plans

The demand for hospital indemnity insurance has been increasing steadily—partially because of the growing popularity of high-deductible, health savings account-qualified insurance plans. Hospital indemnity insurance can provide a daily cash benefit to supplement major medical plans, which in many cases do not cover all the expenses of an accident or illness that results in hospitalization.

Many insurance carriers are reporting double-digit growth in demand for hospital indemnity coverage. Sales increased by 34 percent from 2008 to 2009 for the hospital indemnity plan from the AVMA Group Health and Life Insurance Trust, which is available independently of other GHLIT plans.

"The reality is that, even with major medical coverage, it is not uncommon for hospitalized patients to be responsible for hundreds of dollars a day, when deductibles and coinsurance are included," said Dr. Martha O'Rourke, GHLIT trustee.

"As veterinarians, we recognize the hardship out-of-pocket costs create. It is a financial burden that is compounded when the hospitalization keeps a veterinarian from practicing and earning income. That is what led the GHLIT to introduce hospital indemnity coverage, and why it continues to be an important means for protecting our participants' financial well-being."

Hospital indemnity plans help offset the costs associated with hospitalization with a daily cash benefit that can be used for any out-of-pocket expense, including deductibles and coinsurance. The cash can be applied toward the cost of a private room or deposited into a savings account. It can even be used for general expenses such as food and transportation.

The GHLIT's hospital indemnity plan offers daily benefits that range from $100 to $400. The benefit is paid for each day of a covered hospitalization, up to 500 days. Benefits are higher in the case of intensive-care confinements to accommodate the higher costs that are typically incurred in these situations.

The plan can cover hospitalizations for pregnancy, mental health disorders, skilled nursing care, and addiction and substance abuse. In some cases, the plan pays full or partial benefits for home convalescence, outpatient surgery, treatment in a qualified residential facility, or confinement in a skilled nursing facility.

"The mission of the GHLIT and its trustees is to protect the health and finances of AVMA members," Dr. O'Rourke said. "Hospital indemnity insurance helps that by providing cash when it is needed most and the flexibility for participants to use that benefit in whatever way necessary."

Comprehensive information on the GHLIT's hospital indemnity plan is available from GHLIT agents or online at www.avmaghlit.org. GHLIT insurance is underwritten by New York Life Insurance Co. For more information—including plan details, rates, exclusions, limitations, eligibility, and renewal provisions—or to find a GHLIT agent, call the Trust office at (800) 621-6360.