Hospital indemnity insurance is an insurance plan you can purchase in addition to your regular health insurance plan. You pay a monthly premium, just as you do for other insurance. If you need to be hospitalized, you receive a fixed amount. You can use this amount to cover a variety of benefits depending upon the plan that you choose.
What Does Hospital Indemnity Insurance Cover?
Hospital indemnity plans payout if you need to be hospitalized. These plans don’t have deductibles, coinsurance, or network restrictions. Generally, you just need to be in the hospital possibly in an intensive care unit (ICU), or critical care unit (CCU) confinement.
Because it is an indemnity plan, hospital indemnity insurance pays on a fixed dollar benefit. You use this money for whatever you want, including paying out-of-pocket costs such as deductibles and coinsurance on your underlying health insurance.
Let’s say you are admitted to the hospital for a sickness. You are in the hospital for three days. Your plan might cover:
- $1,000 for the hospital admittance
- $3,000 for each day in the hospital ($9,000)
You would then receive a check for $10,000 and use the money to pay for your hospital bills and anything else.
It’s also family-friendly, meaning plans can cover you, your spouse, and your children.
Who Should Get Hospital Indemnity Insurance?
Hospital indemnity insurance doesn’t replace your medical insurance. But how do you know if you should purchase this supplemental coverage? Here are a few reasons to consider hospital indemnity insurance:
- You have a chronic condition that could make hospitalization more likely.
- You have an upcoming procedure or surgery where a visit or stay in the hospital could be required.
- You’re pregnant or plan on becoming pregnant.
- You have a high-deductible health insurance plan.
What to Consider When Buying Hospital Indemnity Insurance
If you’re interested in purchasing an indemnity plan, there are some things to consider.
Payment Time
How long after you’re confined in the hospital do you receive your payout? Some plans may guarantee a quicker payout than others.
Length of Coverage
Some companies may require a waiting period before allowing indemnity benefits for certain procedures or treatments. Others plans don’t have any such restrictions.
Age Restrictions
Hospital indemnity insurance can be purchased by people between the ages of 18 and 65. Monthly premiums will likely become more expensive as you get older. However, once you turn 65, you will be eligible for Medicare. At that point, you can purchase a medigap plan if you so choose.
Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.
