Hospital Indemnity Insurance can be beneficial when you have high out-of-pocket costs, weak medical finances, or if you want an added cushion in case of an emergency. You can use the cash benefit toward anything you like, either your medical bill costs or to fund your daily expenses.

In the content below, we’ll go over everything you need to know about Hospital Insurance. Then, we’ll look at some commonly asked questions on this topic to ensure you get all your answers.

What is a Hospital Indemnity Insurance Plan?

A Hospital Indemnity plan will give you cash benefits that help pay for the medical expenses associated with a hospital stay. While your current health insurance plan may cover some portion of inpatient care, copayments, coinsurances, or deductibles. It’s likely a Hospital Indemnity Insurance policy would help cover the costs you’d otherwise be responsible for paying. Enrollment in this type of insurance is beneficial because you get cashback in an emergency.

Some insurance companies say the claim is payable even if you don’t get admitted to the hospital. You may only need to meet a minimum number of hours in the emergency room. Benefits aren’t dependent on the hospital bills. You’re paid in addition to any medical costs your policy would otherwise cover. You can use the funds to cover out-of-pocket costs or the cost of daily living.

What is the purpose of Hospital Indemnity Insurance?

The purpose of a Hospital Indemnity policy is to provide financial support after a hospitalization. For example, a fixed benefit amount will be sent to you when you’re hospitalized due to a covered illness or injury. The insurance policy pays the benefit amount you select during your application. Also, there aren’t any restrictions on how you can spend the money.

Is Hospital Indemnity Insurance worth it?

Hospital Indemnity Insurance is worth it, especially when you don’t have the funds to cover the maximum out-of-pocket expenses. However, suppose you have money saved for unexpected costs such as long-term hospital admission. In that case, you may not require a hospital indemnity policy. Also, if you have a top-rated Medigap plan, this insurance policy may not make much sense.

Now, suppose you have a high deductible Medigap plan or a Medicare Advantage plan. In that case, you may find Hospital Indemnity Insurance makes sense. In the event of a long-term hospital stay, are you prepared to cover the medical bills? If not, having a Hospital Indemnity policy would be beneficial.

Working with an insurance agent is beneficial because they can review your current health insurance coverage to help find gaps in your policies. Then, an agent can explain medical insurance products that can provide you with peace of mind.

How do you explain hospital indemnity coverage?

An insurance agent can help you tailor a policy to meet your needs. Hospital Indemnity coverage doesn’t have doctor networks. You can go to any hospital and qualify for these policy benefits.

Different insurance companies may have different benefits or eligibility requirements. For the most part, the application is just a few questions.

Coverage will continue after your first hospitalization. Policyholders will remain eligible for this coverage year after year, regardless of changes in health or age.

Some Hospital Indemnity Insurance Companies offer riders for specific situations. Riders usually increase the premium a little bit.

Some riders include:

  • A specific disease
  • Accident Fixed Indemnity
  • Lump Sum Cancer and Recurrence
  • Lump Sum Heart Attack, Stroke, Restoration

Riders don’t usually raise the premium by much, $5-$25 depending on the rider you select and the benefit amount. Of course, the cost can vary. This is just a general estimate.

What is the difference between a Hospital Indemnity Insurance plan and a Hospitalization plan?

Nothing, Hospital Indemnity Insurance is sometimes called Hospital insurance or Hospitalization insurance. Either way, these are plans that pay you a specific cash benefit amount when you experience hospital confinement, or you’re admitted to the hospital.

Specific eligibility requirements may apply. Talking with an insurance agent about specific options and requirements can make finding the right policy easier.

FAQs

Is Hospital Indemnity Insurance payments tax deductible?

Hospital Indemnity Insurance payments aren’t taxable as long as the coverage is paid on an after-tax basis. The IRS doesn’t usually treat indemnity payments as taxable income since it’s considered a capital recovery.

Can you get Hospital Indemnity Insurance for a family?

Like many medical plans, family members can have a Hospitalization plan covering everyone. These plans could protect you, your spouse, and your dependent children.

Can you get a group Hospital Indemnity policy?

Group Hospital Indemnity insurance is likely offered through an employer. If the employee has a qualifying hospital stay, they’ll receive a payout however they wish.

How Supplemental Coverage Can Help with Unexpected Medical Expenses

Medicare Supplemental health insurance plans are beneficial because they cover most of the costs Medicare would otherwise leave you to pay. The best time to sign up for a Medigap plan is during your Medicare Supplement Open Enrollment Period. You can enroll in coverage without being underwritten or working about a pre-existing condition waiting period.

Call us today to talk with a licensed insurance agent to learn more. Or fill out our online rate comparison form to receive the best rates in your area.

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by Lindsay Malzone, Lindsay Malzone is the Medicare editor for Medigap.com. She's been contributing to many well-known publications since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.