Why
are they called "Hospital
Plans?"There may be different names for these types of plans from carrier to carrier, but they all work the same. First, they tend to
be some of the lowest priced plans on the market. They are really built to handle hospital in-patient, out-patient, surgery, and associated charges well. For some people, this is fine. We typically receive requests for information on "catastrophic health plans". The hospital plans definitely fit this bill but they are not considered comprehensive health plans. What is the difference between these plans and other plans?
Looking at the benefit summary, it can be hard to discern what is different. Typically, the only way to meet the plan's deductible is with a covered benefit (such as surgery, hospital, emergency, diagnostic, etc). Other services such as office visits usually are not covered or only when the deductible is met. The bigger issue is brand name medications. The trend today is towards very expensive medications for more serious illnesses. The big blockbuster Rheumatoid Arthritis medication was $18,000 a few years ago. The follow-up medication is $40,000. They can pretty impressive in terms of stopping the disease but they are also very expensive and traditional hospital health plans do not cover these charges or place annual caps on how much the carrier will pay for them. This is single-handedly the biggest downside to hospital plans.
Of course, the benefit is very low relative premiums to cover truly catastrophic medical bills (outside of medication). This becomes even more important as you get older since health insurance premiums are most directly tied to age. As you get into your 50's and 60's, this annual difference versus other more traditional health plans can be significant.
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