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Understanding Hospital Indemnity Insurance: Financial Protection for Health Emergencies
Whether due to a sickness, injury, or mental illness, medical emergencies are unpredictable and can come with a hefty price tag. Even if you have employer-sponsored health insurance, private health insurance, or Medicare, these plans often only cover a portion of the expenses.
When faced with an unexpected hospital stay, the focus should be on recovery—not worrying about the mounting bills. Hospital indemnity insurance offers an extra layer of financial protection to help safeguard your family from the high costs associated with hospital care.
What is hospital indemnity insurance and how does it work?
Hospital indemnity insurance is a straightforward, flexible way to get extra financial support when you need it most. Here’s how it works:
- The unexpected happens: Imagine your weekend plans are interrupted by severe sickness, injury, or mental illness.
- You go to the hospital: After going to the emergency room, you receive a diagnosis and are admitted to the hospital.
- Hospital indemnity insurance helps you recover financially: Your hospital indemnity insurance pays a cash benefit directly to you. Unlike traditional health insurance that typically pays providers, you can use this cash however you see fit.
The common expenses of a hospital stay
Hospital stays due to sickness, injury or mental illness can result in significant out-of-pocket expenses. The benefits from hospital indemnity insurance can help cover these costs, such as:
- Deductibles: The amount you must pay before your primary health insurance starts covering services.
- Co-pays: Fixed amounts paid for specific services, even after your deductible is met.
- Coinsurance: The percentage of medical costs that you pay after meeting your deductible.
- Hospital parking: Fees that can add up quickly if you’re staying in the hospital for an extended period.
- Lodging: If you have family or friends who travel to help you recover, your benefits may assist with their accommodation costs.
- Everyday expenses: Rent, utilities, and other bills that continue while you’re off work due to illness or injury.
On average, hospital stays cost $3,025 per night. That’s a hefty amount, and without the right coverage, it can be financially overwhelming. Hospital indemnity insurance helps alleviate that burden by providing cash benefits that can be used for any purpose.
Related: The importance of health care transparency
Mental health support
Hospital indemnity insurance can help support mental health in a couple important ways.
Some policies pay benefits for hospitalization due to mental illness, providing important financial assistance during challenging times.
In addition, hospital stays due to sickness or injury can result in depression and anxiety due to the financial burden of medical expenses. Hospital indemnity insurance helps by providing:
- Relief from financial burden: Helps reduce anxiety about medical bills, giving you peace of mind.
- Focus on recovery: Helps alleviate financial stress, so you can prioritize getting better.
- Support for emotional well-being: Provides an extra layer of protection, making recovery more manageable.
Related: Three ways to help employees deal with medical bill stress
How to purchase hospital indemnity insurance
While many insurance companies offer hospital indemnity insurance, it’s important to carefully evaluate your options. Not all policies are created equal, so look for these key features when comparing plans:
- Portability: Ensure you can keep your policy even if you change jobs, move to a different state, or retire.
- Stable premiums: Look for a policy with premiums that won’t increase unexpectedly unless rates are raised for everyone in your state.
- Guaranteed renewability: Your policy should be guaranteed renewable as long as you continue paying premiums on time.
- Waiver of premium: Many policies offer a waiver of premium if you’re hospitalized for a specified amount of time.
- Flexible benefits: Some policies offer additional features, such as coverage for routine doctor’s visits or diagnostic exams.
There are a wide variety of hospital indemnity insurance plans, so it’s essential to shop around and choose a policy that best fits your needs.
Want more? Check out our blog, What is hospital indemnity insurance and who should consider it.
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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?
If you have this policy through your job, or a family member’s job, contact the employer.
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.”
Washington National is a private company that is not Medicare, Medicaid or MaineCare and is not a governmental agency