Hospital indemnity insurance is a supplemental health-insurance plan that pays you cash if you get admitted and confined to a hospital for treatment for illness or injury.
Hospital stays are subject to the deductible in health insurance plans. This means that if you are admitted hospital, you’ll need to pay your deductible first if you haven’t met it already and coinsurance if you have met the deductible.
With deductibles in the thousands of dollars, a hospital indemnity plan can help you have cash to help pay some of the bills you get from the hospital.
Plan Benefits
Here is a sample plan design for a hospital indemnity plan.
| Benefit | Amount |
| Hospital admission | $1,500 (max 1 benefit per year) |
| Intensive care admission | $1,500 (max 1 benefit per year) |
| Hospital confinement | $200/day (max 365 days) |
| Intensive care confinement | $200/day (max 30 days) |
| Observation benefit (longer than 8 hours) | $500 (max 1 benefit per year) |
| Rehabilitation benefit | $200/day (max 365 days) |
| Wellness screening benefit | $50 (max 1 benefit per year per insured) |
Hospital Admission Benefits
Hospital indemnity first pays a benefit if you get admitted to the hospital.
There are two types of hospital admission that are covered:
- Hospital admission If you get admitted to a hospital for hospital stay in a normal room.
- Intensive care admission (ICU) If you get admitted to the hospital into intensive care.
I usually see that the admission benefit and ICU benefit are matching benefits like the plan above.
It will depend on the policy but in most cases, you’ll receive only on of these benefits per admission. They won’t stack on top of each other.
Using our plan design above, a hospital admission will pay $1,500
Daily Hospital Confinement Benefits
Once in the hospital, hospital indemnity insurance then pays a daily hospital confinement benefit.
Just like the hospital admission benefit, daily confinement benefits are paid according to whether you are in a normal hospital stay or intensive care.
In our plan above, hospital confinement is paid $200 per day for up to 365 days. If you are confined to an intensive care unit, the daily confinement benefit would still be $200 per day but it would be limited to 30 days.
Just like the admission benefit, it’s typically one or the other and not both benefits. But, this will depend on the insurance carrier and how the policy is structured.
Observation Benefit
Sometimes you’ll go to the hospital and they won’t admit you. I’ve heard cases where employees have stayed for more than 24 hours and was not admitted to the hospital. The employee filed a claim but the claim was denied.
The reason?
They were not technically admitted to the hospital even though they were at the hospital for more than a full day.
Because of that, the employee did not receive the admission benefit.
Some plans include an observation benefit that is paid if you at the hospital for a period of time but not admitted.
Rehabilitation Benefits
A rehabilitation benefit pays a daily benefit if you enter a rehab facility.
Wellness Screening Benefit
A wellness screening benefit pays a one time per plan year benefit if you receive a qualified health screening.
It doesn’t matter if it was a screening paid 100 percent by your health insurance. File a claim with proof of the screening and you’ll receive your wellness screening benefit.
Pre-Existing Condition Limitation
Most hospital indemnity insurance plans do not have a pre-existing condition limitation.
This is a great benefit for employees who know they will have a hospital admission after the effective date.
This could be because of a planned surgery or due to a pregnancy. You’ll be able to enroll in the hospital indemnity plan and still collect a benefit as long as your admission occurs after the effective date.
All plans vary by insurance carrier and policy. If you have a planned hospital stay coming up, check the plan details to be sure there is no pre-existing condition limitation or exclusion for pregnancy.
Conclusion
Hospital indemnity plans can help off set the cost of a hospital stay.
If there is no pre-existing condition limitation in the policy, hospital indemnity will still pay a benefit if you get admitted. In that case, enrolling in hospital indemnity is a no brainer.
It also make sense to enroll if you have history of medical conditions or hospital stays.
