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Over 36 million people in the US 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. And sadly, bankruptcy due to medical bills is somewhat common.
Since even the best health insurance plans have limits, supplemental insurance called hospital indemnity insurance exists to help offset hospital expenses and cover other costs like groceries, childcare and more while you recover. Here’s what you should know.
What Is Hospital Indemnity Insurance?
Hospital indemnity insurance is an insurance plan you can purchase in addition to your health insurance plan sponsored by your employer, the government or a private insurer. 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 directly to you to help cover the expenses. Depending on the plan you purchase, you could use the benefits for your deductible, coinsurance, transportation, medications, rehabilitation or home care costs, as well as some expenses incurred as you recover.
What Does Hospital Indemnity Insurance Cover?
Hospital indemnity insurance provides a payout to you based on circumstances related to hospitalization. Typical health insurance has specifications on covered services whereas hospital indemnity insurance can be distributed in whatever way you need so you can prioritize your health.
This type of plan doesn’t have deductibles, coinsurance or network restrictions. Generally, a circumstance that would lead to payout would be hospital, intensive care unit (ICU), or critical care unit (CCU) confinement. Depending on the plan you purchase, outpatient procedures, emergency room, ambulance transport and more could be covered.
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, like heart disease or diabetes, that could lead to hospitalization.
- 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, and coverage could be provided for any extra days you stay in the hospital after childbirth.
- You want extra coverage in case of accidents.
- You have a high-deductible health insurance plan.
- You want peace of mind for worst-case scenarios.
How Much Does Hospital Indemnity Insurance Cost?
Just like most insurance plans, costs can vary based on several factors and the type of plan you choose. Shop around to gain a clear sense of what you’re looking for so you can get the best coverage for your health and budget.
On average, hospital indemnity insurance premiums range from $50 to $400 a month. For the premium you pay, you receive a daily max payout based on the plan you choose. To get a quote most accurate for you and your needs, input your information in the calculators provided on insurance company websites. Generally, most hospital indemnity insurance plans allow you to receive $100 to $600 a day, according to Necole Gibbs, a licensed broker at the TNG Insurance Agency in Georgia.
“When it comes to hospital indemnity insurance, the premium is based on several components, including age, sex, geographic location and deductible amounts (if applicable),” says John Ramsey, an agent for Eternal Insurance Agency in Florida. “It’s also important to note that the cost varies by the insurance company.”
What to Consider When Buying Hospital Indemnity Insurance
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? For example, a plan with MetLife ensures processing claims within 10 business days per hospital stay.
Length of Coverage
Another factor to consider is the length of coverage. “Indemnity insurance doesn’t normally have a term limit, but it can have a waiting period, which is how long you have to wait before doing a procedure for the insurance company to pay the claims or reimburse you,” says Ramsey. “The period can vary from one company to another, so it’s important for you to understand what term your policy will be in place for and if there are any requirements,” he adds.
“Some companies may require a waiting period before allowing indemnity benefits for certain procedures or treatments while others don’t have any such restrictions,” says Ramsey. “For example, if you start a plan on Jan. 1, 2021, and this plan has a 90-day waiting period for mammograms, your appointment date or service date you get the mammogram completed must be April 1, 2021, or after for the indemnity plan to pay for it.”
Individual or Family Coverage
Like your medical plan, hospital indemnity insurance is family-friendly, meaning it 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 the ages of 18 and 65, and monthly premiums start low and increase as you age. Once you turn 65, your plan is no longer renewable because other plans like Medicare kick in. These age restrictions depend on the insurance provider you choose and can vary.
How to Apply for Hospital Indemnity Insurance
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 and receiving a check to pay for your expenses.