Every year, millions of Americans are admitted to the hospital, and the costs for hospital stays can come with a hefty bill. Many insurance carriers provide policies to help cover these costs, but is hospital indemnity insurance worth it?
For some, a hospital indemnity insurance policy offers complete peace of mind, no matter what life may bring. Before you make a decision about your coverage, take a moment to learn more about this type of insurance.
What Is Hospital Indemnity Insurance?
Hospital indemnity insurance is a type of supplemental insurance that can be purchased in addition to your current health insurance plan. If you need to stay in the hospital, you’ll receive a fixed benefit to help cover your hospital expenses. These expenses can include your hospital stay, as well as other expenses you’ll incur during your recovery.
How Does Hospital Indemnity Insurance Work?
To be clear, you don’t purchase hospital indemnity insurance by itself. Instead, you purchase this insurance coverage to supplement your existing health coverage.
Like any insurance policy, you’ll pay a monthly premium. If you receive this coverage as part of a group plan, your employer may cover some or all of the premium.
After you’re admitted to the hospital, you’ll receive a fixed benefit paid directly to you. This benefit is typically a lump-sum payment, though some plans offer multiple disbursements to cover longer hospital stays.
An Example of Hospital Indemnity Insurance
Consider the fictional couple Mark and Candace. This young couple recently learned that Candace is pregnant, which will require them to spend a few days in the hospital. But staying in the hospital for a couple of days can cost tens of thousands of dollars. Their current health insurance will cover 80% of the cost, but that still means they’ll need to pay the remaining 20% after they meet their deductible.
So, Mark adds hospital indemnity insurance to his current health plan. He’ll have to pay a premium, but it means that Candace will receive all of the care she needs without shattering their growing family’s budget. The payment they receive from the hospital indemnity plan can offset some of what they pay in hospital bills.
What Does Hospital Indemnity Insurance Cover?
The best news is that the payout from hospital indemnity insurance goes directly to you. That means you can use these funds to pay for more than just your hospital bills.
You can use this insurance money for:
Home health care costs
Hospital indemnity insurance, therefore, provides a broader safety net than a typical health insurance plan. This additional coverage can be used for various expenses not typically covered by healthcare plans, providing complete peace of mind for you and your family.
When Do I Need Hospital Indemnity Insurance?
Hospital indemnity insurance offers a range of benefits, though some individuals will receive more benefits from these policies than others. As you weigh the pros and cons of hospital indemnity insurance, you may want to consider the following:
Benefits of Hospital Indemnity Insurance
An unexpected hospital stay can be financially damaging, even if you already have health insurance.
Hospital indemnity insurance, therefore, offers advantages that include:
Full coverage for all hospital stays
Coverage for expenses not covered by your healthcare plan
Peace of mind that your needs and bills are covered
Ideally, no one would need coverage for extended hospital stays. But we live in a less-than-ideal world. Hospital indemnity insurance can protect you even if the worst should happen.
Who Needs Hospital Indemnity Insurance?
You might especially consider hospital indemnity insurance if you:
Have a chronic condition that may require hospitalization
Have an upcoming procedure that may require hospitalization
Are pregnant (or plan to be) and need coverage for additional days following childbirth
Have a health insurance plan has a high deductible
Work in a high-risk profession where you may need hospitalization after an accident
Want to be prepared in case an unexpected medical situation occurs
Naturally, you might be wondering if you need hospital indemnity insurance if you already have a solid health plan.
Before you answer that question, remember: these supplemental policies cover expenses that traditional health plans do not. A supplemental plan might be beneficial for covering regular expenses (such as food or bills) that accumulate during a hospital stay.
Who Does Not Need Hospital Indemnity Insurance?
There is, however, a group of people who cannot purchase hospital indemnity insurance. These plans are usually only available to those between the ages of 18 and 65. After you turn 65, you’ll be eligible for other plans like Medicare.
Individual providers may have slightly different age restrictions, so always check with your provider before signing up for a plan.
How Much Does Hospital Indemnity Insurance Cost?
The cost of your monthly premiums can vary based on your provider, though Forbes magazine reports that national averages range from $50 to $400 per month. These fees add up, but they remain relatively low compared to the costs of hospitalization and other incidentals that your insurance policy may not fully cover.
To get the most value from your policy, make sure to ask the following questions:
How soon do I receive my payments if I’m hospitalized?
Will I receive payments in one lump sum or installments?
How many days of hospitalization are covered?
Does the plan also cover my family?
Are there any restrictions with this plan?
You may discover that the cost of this insurance plan is well worth it, especially if it can be used to cover your entire family.
The Bottom Line: Is Hospital Indemnity Insurance Worth It?
Without question, hospital indemnity insurance can provide you coverage that your regular health plan cannot. This supplemental coverage can be ideal for those who experience a chronic illness or for those who plan on starting a family and need to cover the cost of a hospital stay.
If there’s anything we’ve learned since the 2020 pandemic, it’s that nothing is certain—not even your health. While you can’t control your circumstances, you can at least plan your response by protecting yourself with hospital indemnity insurance.