Les Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Written By Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Deputy Editor, Insurance Michelle Megna Lead Editor, InsuranceMichelle is a lead editor at Forbes Advisor. She has been a journalist for over 35 years, writing about insurance for consumers for the last decade. Prior to covering insurance, Michelle was a lifestyle reporter at the New York Daily News, a magazine.
Michelle Megna Lead Editor, InsuranceMichelle is a lead editor at Forbes Advisor. She has been a journalist for over 35 years, writing about insurance for consumers for the last decade. Prior to covering insurance, Michelle was a lifestyle reporter at the New York Daily News, a magazine.
Michelle Megna Lead Editor, InsuranceMichelle is a lead editor at Forbes Advisor. She has been a journalist for over 35 years, writing about insurance for consumers for the last decade. Prior to covering insurance, Michelle was a lifestyle reporter at the New York Daily News, a magazine.
Michelle Megna Lead Editor, InsuranceMichelle is a lead editor at Forbes Advisor. She has been a journalist for over 35 years, writing about insurance for consumers for the last decade. Prior to covering insurance, Michelle was a lifestyle reporter at the New York Daily News, a magazine.
| Lead Editor, Insurance
Updated: Mar 10, 2023, 6:37pm
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Hospital indemnity insurance is a type of supplemental insurance that can help you avoid massive medical debt.
The American Hospital Association says over 33 million people in the U.S. are admitted to a hospital every year, many of whom may not be prepared for the cost. Even with proper health insurance, out-of-pocket costs can lead to financial strain—the average cost of a three-day hospital stay is $30,000, according to HealthCare.gov.
The American Bankruptcy Institute says medical debt is one of the leading reasons for bankruptcies. The U.S. Census Bureau estimates that 19% of American households carry medical debt with the median medical debt $2,000. Hospital indemnity insurance can provide a financial safety net if you’re hospitalized and left with significant medical bills to pay.
Hospital indemnity insurance is an insurance plan you can purchase in addition to your health insurance plan. You pay a monthly premium, just as you do for other insurance, and if you end up spending time in the hospital, you receive a fixed benefit amount paid directly to you to help cover expenses.
A hospital indemnity insurance payment could be used for anything, though people often use the benefits for deductibles, coinsurance, transportation, medications, rehabilitation or home care costs. You can also use the money to pay for some expenses incurred as you recover, such as groceries and childcare.
Hospital indemnity insurance payouts are sent directly to you as the policyholder. That’s unlike health insurance, which contracts with providers and pays them directly.
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Hospital indemnity insurance provides a payout to you based on circumstances related to hospitalization or other specific health care services. Typical health insurance has specifications on covered services whereas hospital indemnity insurance can be distributed in whatever way you need.
This type of plan doesn’t have deductibles, coinsurance or network restrictions.
Circumstances that would generally lead to payout would be:
Some hospital indemnity insurance policies may also cover:
Hospital indemnity insurance policies may also cover your spouse and family.
Hospital indemnity insurance doesn’t cover medical care like a health insurance plan and it’s not a substitute for health insurance. It’s instead meant to supplement a health plan.
Hospital indemnity insurance won’t help you with regular doctor visits and tests. It is meant for more serious medical needs, such as hospitalizations.
Hospital indemnity insurance policies also have limits, including:
Insurance companies including Aflac, Allstate, MetLife, Mutual of Omaha and Protective offer hospital indemnity insurance through employers. Fewer companies also let you buy individual hospital indemnity insurance directly from them.
Here are insurance companies that offer indemnity insurance for individuals:
Hospital indemnity insurance doesn’t replace your medical insurance. But how do you know if you should purchase this secondary health insurance coverage? Here are a few reasons to consider hospital indemnity insurance:
Hospital indemnity insurance can start at about $10 a month for individual coverage, according to Cigna. You may pay much less if you get coverage through your employer as part of its benefits package.
Similar to most insurance plans, costs vary based on several factors, including your age, location, deductible (if applicable), insurance company and coverage amount.
You may pay much less for a hospital indemnity insurance policy through an employer. Protective offers policies through employers with coverage that costs between $2 and $18 per month for coverage that pays $100 per day for hospitalizations. People under 50 pay less than $5 per month.
Hospital indemnity insurance plans typically provide hospital daily benefits that vary depending on the policy. You’ll pay higher premiums for higher daily benefit limits. An insurance company may also provide different daily benefits for intensive care, outpatient surgeries, pregnancy and cancer treatments.
If you’re interested in purchasing hospital indemnity insurance, here’s what to consider before selecting a plan for you or your family.
As you compare hospital indemnity insurance plans, find out the payment time for each one. In other words, how long after you’re confined in the hospital do you receive your payout?
Another factor to consider is the length of coverage. A hospital indemnity insurance plan covers you for a certain number of hospitalized days, which influences how much you pay for coverage.
Possible length of coverage for hospital indemnity insurance, may include:
Make sure to read the fine print so you know exactly the plan’s length of coverage.
Indemnity insurance can also have a waiting period before the insurance company pays you following a covered hospitalization, procedure or treatment.
Like your medical plan, hospital indemnity insurance can cover you, your spouse and your children. Consider the coverage that would best fit your family’s needs if you’re purchasing a plan with them in mind as well.
Hospital indemnity insurance can be purchased by people between ages 18 and 65, and monthly premiums start low and increase as you age. These age restrictions depend on the insurance company you choose and can vary.
Applying for hospital indemnity insurance doesn’t have to be difficult. You can consult a licensed agent in any state or shop online for a plan that fits your needs. Unlike health insurance, there isn’t a marketplace available. You can start your search by asking your current health insurance plan provider to see if they offer hospital indemnity insurance. If not, you can often find insurance companies or brokerages that offer auto, life or other insurance plans that also provide this type of benefit.
Once you’ve selected a plan, using your benefits is as easy as submitting a form once you receive qualified medical care.
A supplemental hospital indemnity insurance policy could be a good solution if you’re concerned about potential health costs, including if you expect to need medical care or have a child.
Hospital indemnity insurance policies could also be a wise decision for people with a high-deductible health plan and/or a health plan with large out-of-pocket costs. Hospital indemnity insurance can also help pay out-of-network charges, which are higher than in-network care. In these cases, hospital indemnity insurance can help whether your health plan covers a portion of out-of-network care, such as a preferred provider organization (PPO) plan, or covers no out-of-network providers, such as a health maintenance organization (HMO) or exclusive provider organization (EPO) plan.
Hospital indemnity insurance can be a way to get financial assistance and keep you from racking up medical debt, but remember they’re supplemental plans and aren’t a replacement for health insurance.
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Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before covering insurance, Les was a news editor and reporter for Patch and Community Newspaper Company and also covered health care, mortgages, credit cards and personal loans for multiple websites.
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