Is Hospital Indemnity Insurance Worth It for You? 2024

Is hospital indemnity insurance worth it? As with most questions involving insurance, this one doesn’t have a simple “yes” or “no” answer.

Consider, for instance, the fact that many Americans can’t afford the cost of unexpected healthcare or choose to delay healthcare altogether, and two-thirds of medical debt results from an acute healthcare need. Additionally, nearly 60% of debts under collection in the U.S. are medical in nature.

Could you handle the cost of a sudden illness or injury that landed you in the hospital? The average cost of a stay at a community hospital in the U.S. is $14,101. Many patients take home medical debt after being discharged.

Hospital indemnity insurance can help you leave the hospital physically and financially healthy by supplementing your health insurance to pay for unexpected treatment for illness or injury.

What Is Hospital Indemnity Insurance?

Hospital indemnity insurance, also known as fixed-indemnity health insurance, pays you cash directly to cover your expenses if you’re hospitalized for an illness or injury.

If your health insurance doesn’t cover the full cost of your hospital stay, you can use the emergency funds to pay for your treatment costs, expensive medications, or even the deductible, copay, or coinsurance on your policy. Alternatively, you can use the money to pay for other expenses you incur while in the hospital or other related costs.

How Does Hospital Indemnity Work?

Still asking, “What is a hospital indemnity plan?” Here’s a closer look at how one works.

With voluntary hospital indemnity insurance, you pay a health insurance company a premium, and the company pays you a fixed amount of cash in installments or a lump sum to cover the expenses of your hospital stay.

Hospital indemnity coverage plans pay out based on the medical services you receive. This fee-for-service payment method means you can go to any provider you choose — you don’t have to concern yourself about which providers are in your network. The payment for a covered service is the same regardless of the provider you choose.

After you receive your care, your hospital indemnity policy pays you for it directly.

What Does Hospital Indemnity Insurance Cover?

Hospital indemnity insurance is specifically intended to cover hospital stays and in-patient services, or those you receive while staying in the hospital. Here are some of the common coverage options you might find:

• Hospital stays

• Intensive care

• Critical care

The best hospital indemnity insurance plans will also offer coverage for outpatient services, emergency room visits, and ambulance services, albeit for higher premiums.

How Much Does Hospital Indemnity Pay?

Hospital indemnity insurance typically pays out daily allotments of $100 to $1,000, though the exact amount you receive will depend on your specific plan and its limitations. Those limitations could include:

• Days: The total number of days a plan pays in a year (e.g., 90 or 180 days)

• Age: Some plans reduce benefits after 65 or 70 years of age

• Deductible: Some plans come with a deductible

Cost is a central concern with any insurance, so consider these factors and the prospective payout particular policies offer when comparing hospital indemnity insurance plans.

What Are the Pros and Cons of Hospital Indemnity Insurance?

To provide further clarity on the subject, here are some notable indemnity health insurance pros and cons:

Pros

• Provides cash for hospital-related expenses

• Can cover other services beyond hospital stays

• You can spend the money however you want

• No deductible in most cases

• Certainty about the amount you’ll receive

Cons

• Limits on payment days and age

• May require underwriting

• May charge higher premiums for pre-existing conditions

• May deny coverage for pre-existing conditions

• Deductibles, in some cases

When deciding whether hospital indemnity insurance is worth it for you, it’s important to understand that it’s meant to supplement your existing health insurance coverage, not replace it.

Group Hospital Indemnity Insurance

Group hospital indemnity insurance is hospital indemnity insurance offered through an employer or organization, similar to standard group health insurance. Your employer may offer group hospital indemnity insurance as a benefit to allow employees to recover after a hospital stay without the worry of additional medical bills.

Group hospital indemnity benefits are paid directly to the qualifying employee or group member. These policies typically cover:

• Emergency room visits

• Ambulance services

• Outpatient surgery

• Labor and delivery

• Newborn care

• Mental health treatment

• Transportation to therapy

• Rent

• Childcare

• Groceries

Portability is an important feature distinguishing group hospital indemnity insurance, meaning if you leave your employer or the organization offering the plan, you can take it with you, as you’re the one paying the premiums.

How Much Does Hospital Indemnity Insurance Cost?

Fixed-indemnity health insurance premiums generally cost much less than what you pay for health insurance. Monthly premiums can start at as little as $10 and climb as high as $400.

The price you pay for standard hospital indemnity insurance is determined by your age, the cost of a daily hospital stay, the area where you live, and your chosen insurance provider and coverage level. Group hospital indemnity insurance may be less expensive.

Find the Right Hospital Indemnity Insurance Policy for Your Needs

Are you considering taking out a hospital indemnity insurance plan to better protect yourself and your loved ones? At ConsumerShield, we care about you and will take the time to answer any questions you have to help you make the best decision for your situation. Reach out to us today to learn more.