Even a quick trip to the hospital can result in unexpected expenses that your existing health coverage may or may not cover.
This is where hospital indemnity insurance may help, by giving you a payment to help cover expenses that result from a hospital visit and unexpected emergencies.
Hospital indemnity insurance defined
Hospital indemnity insurance is a supplemental insurance offering that pays directly to the insured person, not to medical providers, for covered occurrences. Once the money is in your hands, you can spend it however you see fit.
Who may need hospital indemnity insurance?
It's easy to be caught off guard by the variety of hospitalization-related expenses that aren't covered by medical insurance — from co-pays and deductibles to groceries and childcare. We may also underestimate how expensive it is. The average cost of a three-day hospital stay is around $30,000.1
These costs can add up quickly and may negatively impact a tight household budget. Hospital indemnity insurance can help cover these unforeseen costs and provide some financial relief.
What can hospital indemnity insurance be used for?
Payments from a hospital indemnity plan can cover costs from an extended hospital stay, transportation to and from follow-up appointments, and more. Here are a few expenses you might want to use it for:
- Deductibles and co-payments
- Out-of-network care and treatment
- Medical testing
- Therapy and rehabilitation
- Lodging or transportation costs (if you need to travel for care)
- Other household bills
What are the benefits of hospital indemnity insurance?
Hospital indemnity insurance can offer financial support to you or your family for an unforeseen large expense or during an emergency and help keep your family's finances on track. Plus, paying a monthly premium that's deducted from your paycheck can make financial planning easier than you think.
Consider the following four advantages of hospital indemnity insurance:
1. You can use the benefit payment as you see fit
When you make a qualifying claim on your hospital indemnity insurance policy, you receive a payment from your plan that’s paid directly to you. You can use these funds in any way that might help you and your family with both unexpected and planned expenses.
For example, you might need it for food deliveries, childcare, hospital co-pays, or other essential bills. Once the money is in your possession, it’s entirely up to you how you spend it.
2. Coverage is typically guaranteed, and payments are easy
Unlike other insurance policies that may involve a medical screening, hospital indemnity insurance is typically a voluntary benefit that’s guaranteed without the need for a medical exam or health questionnaire.
Insurance premiums are also often handled directly through payroll deductions if the policy is provided by your employer. This means you never have to worry about missing a payment or having your policy lapse. It’s an easy way to ensure you’ll have extra financial protection in the case of a hospital stay, without the added stress of remembering to make monthly payments.
3. You may be able to take your benefits with you if you change jobs
Although most hospital indemnity coverage plans are provided through an employer, you can often take your plan with you if your employment status changes. As long as you continue making your premium payments — and your employer doesn’t terminate the group policy — you’ll be covered whenever you might need to use it.
4. It's a smart step in financial planning
Even the savviest of budgeters can run into unforeseen expenses. Although health insurance may cover a portion of hospital bills, it may not cover an entire stay. Plus, there are other costs to consider that can affect you financially, like childcare when you're in the hospital and recovering at home, transportation costs if you can't drive, additional healthcare needs like physical rehabilitation, and even grocery and food delivery costs. The cash provided by hospital indemnity insurance can help cover many of these expenses.
Hospital indemnity insurance FAQs
To learn more about hospital indemnity insurance, review the following frequently asked questions.
Is hospital indemnity insurance for inpatient and outpatient care?
Yes, hospital indemnity insurance typically covers a variety of situations, including general hospital stays, surgery, emergency room visits, and intensive care unit stays.
How much does hospital indemnity insurance cost?
Prices can vary depending on a variety of factors, such as your age, whether you’re adding family members and the amount of coverage you're getting. That said, plans tend to be more affordable than you may think. Talk to your employer for more information about costs.
Can I use hospital indemnity insurance for a family member?
Generally, a spouse or children you include on the policy are covered as well.
What if I have a medical condition?
Acceptance is often guaranteed, as long as you sign up during the enrollment period and remain active at work. Some states might also require you to have medical coverage, so be sure to talk to your employer about any other exclusions that may apply to you or your family.