What You Need to Know About Hospital Indemnity Insurance

Hospital indemnity insurance can help cover expenses for hospital admissions that might not be covered by other insurance plans.

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Your hospital indemnity insurance questions, answered

Health insurance these days is about a lot more than just a trip to the doctor. There are all kinds of supplementary health insurance plans — from those related to short and long-term disability to more niche offerings, like coverage related to unexpected childcare expenses — to consider these days.

As an employer, your employees will naturally direct their questions to you as they attempt to navigate the big, confusing world of health insurance plans offered through your business.

One often overlooked benefit is hospital indemnity insurance. Never heard of it? Or perhaps you have an idea of what hospital indemnity insurance entails, but don’t quite feel comfortable enough to help your employees understand what hospital indemnity insurance covers?  Whatever the reason, we’re here with a crash course outlining the basics of hospital indemnity insurance.

What is hospital indemnity insurance?

Hospital indemnity insurance is a type of supplemental coverage that insurance carriers offer designed to cover expenses for a hospital admission that might not be covered by other insurance plans.

The average 3-day hospital stay can cost around $30,000. Hospital indemnity insurance can help since it provides a lump sum directly to the policyholder and can cover things medical insurance can’t.

How does hospital indemnity insurance work?

Unlike health insurance that typically pays for certain medical services only after deductibles and/or copay requirements are satisfied, payments under hospital indemnity insurance are usually triggered whenever specific hospital events happen.

Like other types of insurance, these plans usually operate on the basis of covered illnesses or injuries when paying out for a hospital stay, so, as always, it’s important to read the fine print of your insurance provider’s hospital indemnity insurance to understand what exactly it will and won’t cover.

The way that plans pay out differs as well. Usually plans will pay out smaller lump sums for shorter stays while opting for consistent payments (think daily or weekly) for longer hospital stays.

The good thing about this type of supplementary insurance is that it is often a flexible cash payment that the recipient rather than a doctor or medical institution. The recipient can then use that money to pay for whatever they choose, from deductibles to hospital stays and ambulance bills. This is the central way that supplemental hospital indemnity insurance differs from regular health insurance: The payouts often aren’t tied to specific services, but rather upon the occurrence of specific events.

The good thing about this type of supplementary insurance is that it is often a flexible cash payment that the recipient rather than a doctor or medical institution. The recipient can then use that money to pay for whatever they choose, from deductibles to hospital stays and ambulance bills.

Are there different kinds of hospital indemnity insurance?

Like regular health insurance, there are essentially tiers to hospital indemnity insurance. More basic plans typically cover just the costs associated with hospital stays. More robust plans can go into covering everything from ambulance trips to maternity-related visits and more. Of course, the more you cover, the more your plan will cost you.

Overall, though, this supplemental insurance tends to land on the more affordable side of things. Depending on age and the like, hospital indemnity insurance can be as low as $20 a month.

Hospital indemnity insurance and COVID-19

The COVID-19 pandemic has affected many aspects of employees’ lives — including benefits. It has created a heightened sense of illness and mortality, and for many a greater urge for security. This has created a higher demand for benefits like hospital indemnity insurance.

Throughout the pandemic, contracting the virus has been a serious concern for countless employees, and many understand the need for financial protection in case it happens to them. Hospital indemnity insurance can provide critical financial support to cover medical expenses when it’s most needed.

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