What need is there for this insurance?
With the increasing prevalence of high deductible policies, many people are faced with paying for large medical expenses out of their own pockets. Hospital Deductible Insurance can help reduce or take away that risk in the event of hospitalization which helps make the transition to a high deductible policy easier for employees.

Why doesn’t the plan cover outpatient expenses?
Hospital Deductible Insurance was specifically created to provide affordable protection against hospitalization - the most important and expensive coverage “gap” created by high deductible policies. While outpatient expenses can be significant under a high deductible policy, most people can find a way to pay for them because they do not occur all at once. Hospitalization is a different matter because the entire deductible amount becomes due immediately.

There are two principal reasons why HDI does not cover outpatient expenses:

1. the premium for a high deductible policy plus a separate full gap coverage policy would be as much or more than the cost of a single comprehensive policy;

2. Federal Health Savings Account (HSA) legislation prohibits a full gap coverage policy from being paired with a high deductible policy. The penalty is loss of tax deductibility for contributions to the HSA. A limited plan which pays a fixed benefit for hospitalization (like HDI) is acceptable.

What are the chances of being hospitalized?
A recent US government survey¹ showed that, overall, 117 of every 1,000 people were hospitalized in the United States in 2005, the last year for which full data is available. That means nearly 12% of the population spent at least one night in a hospital. Gender and age are the important factors in hospitalization; specifically:

•9.5 % of males are hospitalized vs. 13.8% of females

•the likelihood of hospitalization increases with age:
 

Does this insurance work with a Health Savings Account?
Absolutely. HDI was designed with Health Savings Accounts in mind. It is not “other prohibited insurance” as defined in the federal HSA legislation and may, therefore, be used in conjunction with an HSA. Other gap plans which cover both inpatient and outpatient expenses do not qualify.

Is maternity covered?
Yes, maternity is treated the same as any other illness.

How are claims paid?
All claims are paid directly to the provider of service when benefits have been assigned by the employee. If benefits are not assigned, payment is made directly to the employee.

Will the plan pay benefits if an insured person is hospitalized more than once?
No. Depending on the amount of HDI coverage selected, all or a significant portion of the deductible will be satisfied upon the first occurrence of hospitalization in the year leaving no need for additional coverage for the rest of the year because the high deductible health plan will take over once the deductible is satisfied.

Are pre-existing conditions excluded?
Pre-existing conditions are not excluded when the employer pays the full premium for coverage for the employee. If, however, the employee pays any portion of the premium for his or her own coverage, a 6 month pre-existing conditions exclusion applies. When the employee’s coverage is fully paid by the employer, employees may be required to pay for their families and no pre-existing conditions exclusion will apply to anyone in the family.