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Q&A: Is hospital insurance right for you?

Staff Writer

July 11, 2022

Are you trying to decide if hospital insurance is a good idea for you and your family? Many people don’t understand why they could need this coverage if they already have health insurance through their employer, the Marketplace or Medicare. Check out our Q&A to learn the basics about hospital insurance and how it can help you protect your family’s health and financial security!

Q: What is hospital insurance?

Hospital insurance is a type of supplemental health insurance. It’s sometimes included in workplace benefits packages, or it can be purchased by individuals directly from insurance companies.

Hospital insurance pays benefits when you’re admitted to the hospital for many reasons including illness or injury. Benefits vary from company to company, but typical hospital insurance benefits could include:

• Hospital confinement lump sum—a cash lump sum payable the first day of hospital confinement
• Emergency room benefits—payable for treatment in the emergency room
• Daily benefits—payable per day of hospital confinement
• Other benefits—could include outpatient, doctor office, rehabilitation, travel, pet boarding and more!

Q: How are benefits paid?

Hospital insurance pays cash benefits directly to you, not doctors or hospitals. This means you can use the benefits for ANY purpose—from medical bills to living expenses to income replacement while you’re on the mend.

Q: Why do I need hospital insurance if I already have regular health insurance?

Good question! Hospital stays are expensive costing on average $11,700.¹ Regular health insurance that you own through your employer, the Marketplace or Medicare covers many of your health care expenses, but not all. Most health insurance plans can leave you exposed to significant out-of-pocket costs including:

• DEDUCTIBLES » What you must pay before your medical insurance starts paying benefits. The average annual deductible for family coverage costs $8,439.²
• COPAYMENTS » Cost-sharing payments you make each time you get a medical service after reaching your annual deductible. For example, you may need to pay $30 for every medical service after you meet your deductible.
• COINSURANCE » A percentage of covered health care services that you pay after you meet your deductible. For example, you may need to pay 20% for covered services after you met your deductible.
• NONCOVERED TREATMENTS » Sometimes major medical insurance refuses to pay for certain claims. Noncovered treatments can leave you with big bills to pay.

Cash benefits from hospital insurance can help you cover these typical out-of-pocket costs so you can focus more on your health than your finances!

Q: Should I get hospital insurance?

That’s for you to decide, but many families greatly benefit from having a policy! Consider how hospital insurance can work for you…

1. THE UNEXPECTED HAPPENS—Your plans to enjoy the weekend are ruined when intense stomach pain sidelines you.
2. YOU GO TO THE HOSPITAL—You go to the ER and are diagnosed with appendicitis. You will need surgery and will need to stay in the hospital for a couple of days.
3. HOSPITAL INSURANCE HELPS WHEN YOU NEED IT MOST—Your policy pays cash benefits directly to you. You use the money to help cover your $2,000 health insurance deductible and hospital bills from your 20% coinsurance.

It pays to be prepared for hospital stays! For more information, call (800) 525-7662.

¹Department of Health and Human Services, National Inpatient Hospital Costs: The Most Expensive Conditions by Payer, 2017, https://www.hcup-us.ahrq.gov/reports/statbriefs/sb261-Most-Expensive-Hospital-Conditions-2017.jsp, July 2020.

¹eHealth, How Much Does Individual Health Insurance Cost?, https://www.ehealthinsurance.com/resources/

individual-and-family/how-much-does-individual-health-insurance-cost#:~:text=A%20deductible%20is%20the%20

amount,and%20%248%2C439%20for%20family%20coverage., 2020.

IMPORTANT: This is a fixed indemnity policy, NOT health insurance

This fixed indemnity policy may pay you a limited dollar amount if you’re sick or hospitalized. 
You’re still responsible for paying the cost of your care. 

•   The payment you get isn’t based on the size of your medical bill.

•   There might be a limit on how much this policy will pay each year. 

•   This policy isn’t a substitute for comprehensive health insurance. 

•   Since this policy isn’t health insurance, it doesn’t have to include most Federal consumer protections that apply to health insurance.

Looking for comprehensive health insurance?
•   Visit HealthCare.gov or call 1-800-318-2596 (TTY: 1-855-889-4325) to find health coverage options.
•   To find out if you can get health insurance through your job, or a family member’s job, contact the employer. 

Questions about this policy?

• For questions or complaints about this policy, contact your State Department of Insurance. Find their number on the National Association of Insurance Commissioners’ website (naic.org) under “Insurance Departments.”