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Use Some of Your Part-B Giveback to Avoid Inpatient Hospital Copayments
As we age, one thing we can count on is a hospital stay is not a matter of if, but of when. Many healthy seniors would debate that, but accidents happen. Whether it’s due to comorbid factors, the flu or life just happening, you will pay inpatient hospital copayments to the tune of several hundred to several thousand dollars – depending on your plan. If you get a Part-B giveback, use some of that money to avoid these costly copayments. Here’s what you need to know.
Hospitalization Copayments: How They Work
Medicare Advantage plans have made healthcare more affordable. However, there are some costs. Depending on your plan (HMO or PPO) these cost vary widely. The more flexibility you seek, the higher the costs.
The Benefit Period
When you are hospitalized, a benefit period is created. This is a 60-day window that starts with day one. Any deductibles (for Original Medicare) or copayments are due. If you are discharged and readmitted withing the 60-day window, for the same reason, you don’t pay these charges again. If it’s for a different reason or past 60 days, you do.
Each plan has their own variation, but typically you will pay X amount of dollars per day hospitalized, up to the maximum days allotted. For example, it may be as low as $125 per day, for the first four (4) days. Or it could be $395 per day for the first seven (7) days – or anywhere in between. You could be hospitalized for 30 days or more, but you will only pay either for the four or seven, depending on your plan.
So, if you are hospitalized for three (3) days, you take the amount stated and multiply it by the number of days you are hospitalized and that is your copayment. In the two examples above, the bill would either be $375 or $1,185, respectively.
Re-hospitalization Copayment for Partial Stays
In the above example, you were hospitalized for only three (3) days. Now, what if you were re-hospitalized for the same condition within the same benefit period? Depending on your plan, you will owe the remainder of the days you did not use up.
In the previous example, plan A was for a four-day maximum, while plan B was for seven. Therefore, if you were re-hospitalized for an additional five (5) days, you would owe:
- Plan A: one more day to complete the four, or $125.
- Plan B: four more days to complete the seven, or $1,580
Overall, the total expense for this benefit period would be:
- Plan A: $500
- Plan B: $2,765
As you can see, this is a wide difference. Many factors decide what that copayment is, but one in particular is whether the plan is an HMO (Health Maintenance Organization) or a PPO (Preferred Provider Organization). Regardless, for many this is a high cost. So, how can you protect against this? Hospital indemnity insurance.
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Using Part of Your Giveback for More Robust Protection
Many plans give Part-B givebacks. These are also known as Part-B buydowns and/or Part-B credits. Tomāto, Tomăto – they are all the same things. In essence, your plan pays a portion of your Part-B premium, and Medicare deducts the balance from your check. Some givebacks are $30, $50, $100, $125 and even $145 – this depends on where you are located and the plan you choose.
If you are receiving a $145 giveback, then you will notice that Medicare is only deducting $25.10, instead of $170.10 from your check (for 2022). A nice savings! This adds up to $1,740 per year. But even if they are receiving $50, which would be $600 per year, using some of this money to shore up your benefits is a wise decision.
Hospital Indemnity Insurance
Hospital indemnity insurance is sort of like AFLAC, but for Medicare. In essence, you choose what you would like the policy to pay you if you were hospitalized, per day and for how many days. If we take the example above with the $125 for 4 days, you will need a maximum of $500 if you were hospitalized.
Before you decide on how much you wish to receive, you want to ask yourself two questions:
- Do I just want to cover the copay or include any other non-medical expenses I may incur?
- Will I stay with this plan forever?
First, there are always non-medical expenses: travel for family, food, lodging, etc. Second, the chances of staying on one plan forever is low, since in this competitive market, each year plans change and get better. Therefore, you may change your plan annually or every few years. This means your copay would change and there’s no way of knowing what it would be, now.
Why is this important? Because the premium of a hospital indemnity policy is based on age. If you wanted to change it in the future, depending on the carrier, it could cost more. So, you want to think a little more broadly.
A good example would be choosing $250 per day for 6 or 7 days, allowing you a surplus to cover those expenses or to save for another day. And the great thing about hospital indemnity policies, if you are charged during a benefit period, they will pay you for the days you requested.
If we use the example above, and you requested seven (7) days of coverage and were hospitalized for only three (3) days, you would only be paid for the three you used. But if you were re-hospitalized, as above, you still have four (4) days remaining in this benefit period, and they will pay you those days, whether or not your insurance company is charging you for those days.
If a new benefit period begins and you incur a new charge, as long as you continue to pay your monthly premium, you are covered. And since policies are pennies on the dollar, they pay for themselves, typically with one hospital stay paying more than two-years of premiums, on average. Each plan is different, and you want to understand the summary of benefits for your policy. Regardless, make sure you get the information and then decide if it fits your budget or not.
So, whether you get a Part-B giveback or not, a hospital indemnity policy is worth looking into. If you DO get a Part-B giveback, then hospital indemnity insurance is a no brainer. If you’re not sure, have questions or just want to kick the tires, get a free, no obligation quote. Make no assumptions. After all, after you are hospitalized is not the time to decide to get it. For one, it’s too late, and for two, you will no longer qualify until at least six months (12 months for some carriers) have passed.
Feel free to contact us to get your questions answered and a free, no obligation quote, and have peace of mind knowing you won’t go bankrupt due to being hospitalized.
