Hospital Indemnity Plans

Most primary health insurance plans do not cover all hospital costs. If you're hospitalized, you can be stuck paying the amounts not covered by your primary insurance, and that can get expensive. A hospital indemnity plan is a supplemental plan that covers some of the costs associated with a hospital stay and may provide extra coverage that your health plan doesn't.

Services Covered

Hospital indemnity plans provide a daily benefit for each day you are hospitalized, though the benefit amount is usually fixed without regard to the actual hospital expenses incurred. This daily amount is paid to you - and your stay in the hospital qualifies you for the benefit. Different plan types exist, but a common indemnity benefit is a set cash amount per day, such as $100. In this case, the total benefit you receive is a multiple of the number of days you are in the hospital. For example, if you are hospitalized for 10 days and the daily benefit is $100, then you are eligible for a total of $1,000.

Services Not Covered

Depending on the plan you choose, some services like outpatient surgery or skilled nursing facilities may not be eligible for cash payments.  Furthermore, hospital indemnity plans only pay a set cash amount.  The rest of the hospital bill will be your responsibility.  Having comprehensive insurance can help pay the majority of the bill.

Some polices contain limitations on pre-existing medical conditions that you may have before your insurance takes effect.  Others contain an elimination period, meaning that benefits will not be paid until after you have been hospitalized for a specified number of days.  When you apply for the policy, you may be allowed to choose among two or three elimination periods, with different premiums for each.  Although you can reduce your premiums by choosing a longer elimination period, you should bear in  mind that most patients are hospitalized for relatively brief periods of time.

It is always important to read the plan description for exclusions before choosing any plan.

Coverage Limits

Hospital Indemnity Plans offer many choices with regard to benefits and terms, so be sure to ask questions and find the right plan to meet your needs.