Every year, over 36 million people are admitted to a hospital across America. Many of these individuals are not prepared for how much a stay in the hospital can cost. Even with the right hospital confinement indemnity insurance, the financial strain from ongoing charges (the average cost for only three days in the hospital is $30,000) can be challenging.
Indemnity insurance is a type of supplemental health insurance designed to help make up for the cost of hospital care. It can also cover further expenses, such as outpatient care, childcare, groceries, and more while you get better.
Suppose you’re looking for a way to protect yourself from unexpected medical costs. In that case, hospital indemnity insurance may be the right option for you.
Read on to discover everything you need to know about hospital confinement indemnity insurance.
What is hospital indemnity insurance?
What is hospital indemnity? For starters, it’s a type of policy that you can buy as an add-on to the health insurance typically provided by a private insurer, your employer, or the government.
A hospital indemnity plan benefits you if you become hospitalized, regardless of whether or not you have other health insurance coverage.
Keep in mind that not all indemnity plans are the same. However, many offer similar benefits such as:
- A fixed benefit for hospital admission
- A fixed benefit for overnight stays
- A fixed benefit for every overnight stay in an intensive care unit
Many hospital confinement indemnity plans also offer benefits paid for specific outpatient procedures, benefits for particular diseases, and benefits for being treated in an emergency room.
With a hospital indemnity plan, you similarly pay a monthly premium to other types of insurance. The premium is contingent on several factors including:
- Geographic location
Many people use their benefits to pay for the cost of things like:
- Lost wages
- Mortgage or rent payments
- Home care
Be sure to read the details of the policy to see what it can be used for.
What does hospital indemnity insurance cover?
Hospital indemnity policies are supplemental policies that work alongside your regular health insurance.
You can expect hospital confinement indemnity insurance to provide a payout based on the circumstances under which you are hospitalized.
Most health insurance policies have stipulations on covered services. In contrast, indemnity insurance can be divvied out to suit your immediate needs so that you can focus on your health.
They can also cover your children and your spouse.
Hospital Indemnity Insurance Family Plans
If you’re in the market for a hospital indemnity insurance policy and are considering adding family members to your coverage, be sure to check the terms of the policy first.
Determine what eligibility requirements exist, waiting periods, and maximum benefit amounts. Understanding all of this information ahead of time can help you decide whether or not to add family members to your policy.
Is hospital indemnity insurance worth it?
If you’ve already purchased health insurance, you may be wondering whether you should add on hospital indemnity insurance. Worth it or not, many believe in ensuring they have every bit of additional protection possible.
Hospital confinement indemnity certainly provides extra financial protection if you’re hospitalized.
Before deciding, consider your needs and whether or not this coverage makes sense for you. With that said, hospital indemnity insurance may especially be worth it if:
- You have a long-standing condition, like diabetes or heart disease, which may lead to hospitalization
- You have an upcoming surgery or procedure where a visit or stay in the hospital might be needed
- You plan on becoming pregnant or may be pregnant already, and the plan could provide coverage for any extra days you spend in the hospital after childbirth
- You want additional coverage in case of accidents
- You have a high-deductible health insurance policy
- You want peace of mind considering worst-case scenarios
Here are some additional questions to ask yourself:
- What’s the state of your health?
- Is it likely that you or someone in your family might be hospitalized in the near future?
- Do you have emergency funds available?
- How comprehensive is the health insurance provided by your employer?
- How much might you pay in premiums over time compared to the potential benefits you might receive?
If any of these scenarios or questions apply to you, then you might want to consider adding a hospital indemnity insurance policy to your health insurance coverage.
What is the cost of hospital indemnity?
No one wants to think about what could happen if they get sick or injured and need to go to the hospital. However, if the unexpected does happen, it’s good to know how much additional protections may cost.
As with most insurance policies, the cost varies based on a range of factors and the specific policy you choose. You should look around and compare indemnity plans to get a clear picture of what’s available. That way, you can ensure you pick the plan best suited to your budget and health status.
With that said, you can expect hospital indemnity plans to range from $50-$400 per month. You’ll receive a maximum daily payout based on the plan you choose.
Typical daily payouts provided by hospital confinement indemnity plans range from $100-$600.
Things to Consider When Purchasing Hospital Indemnity Insurance
There are a few fundamental factors to consider when purchasing hospital indemnity insurance:
- What is your budget?
- What is your health status?
- What are the terms of the policy?
- What is the maximum daily payout?
- What is the waiting period before benefits go into effect?
- What pre-existing conditions are excluded from coverage (if any)?
However, there are some more significant issues to think about too.
If you are looking for hospital indemnity insurance, consider that monthly premiums start low and increase as you age, so it’s essential to compare rates before choosing a provider.
This type of insurance is typically available only for those between 18 and 65. Once you turn 65, your plan will no longer be renewable because Medicare goes into effect.
Individual or Family Coverage
Suppose you have a life partner and children. In that case, you might think about looking into hospital indemnity insurance plans that offer family coverage. Think about the amount of coverage your family might need when purchasing an indemnity policy.
Does the hospital indemnity policy cover pregnancy?
While all policies are different — and it is essential to read the fine print — many hospital indemnity policies offer some coverage for childbirth. This can be a valuable benefit for new mothers who may not otherwise have any coverage for their hospital stay.
If the policy does cover childbirth, it will often specifically cover things like the mother’s hospital admission for regular labor and delivery. It may also cover a baby’s stay in a neonatal intensive care unit.
Is the hospital indemnity plan tax-deductible?
The question of whether hospital indemnity insurance is tax-deductible was up in the air until 2017. In that year, the IRS stepped in and clarified the matter.
- If a company covers the expense of hospital indemnity insurance coverage for its employees, this will be subject to taxes.
- If a company offers a voluntary hospital confinement indemnity plan to employees, and employees cover premiums with after-tax dollars, it will not be subject to taxes.
Always check with your tax expert to see how your taxes are impacted.
Length of Coverage
When shopping for indemnity insurance, it’s vital to ask the right questions and understand what your policy covers. Ensure you know how long the coverage lasts and if there are any waiting periods.
Each insurance company may have its own waiting period, so it’s crucial to know how long your policy will be in place and if there are any additional requirements. For example, some plans may have a benefit period of one year, while others may cover you for the length of your stay in the hospital.
By taking these factors into account, you can be sure to choose a hospital indemnity plan that best meets your needs.
Remember, hospital indemnity insurance can be a valuable tool in protecting your finances in the event of a hospital stay.
How to Apply for a Hospital Indemnity Plan
In most cases, you can apply for a hospital indemnity plan through your employer or an insurance company. If you have a health insurance plan, you may be able to add on a hospital indemnity policy as well.
Verify with your benefits administrator or human resources department to see if your employer offers this type of coverage.
You can also get in touch with an insurance company directly to inquire about purchasing a policy. Be sure to compare different plans, prices, and types of insurance plans before making a decision. Once you have selected a plan, you will need to complete an application and pay the premiums.