Be ready: What is Hospital Indemnity Insurance, and how can it help you?

This is article is part of our “Be Ready” series of articles exploring workplace Supplemental Health Benefits — and how they can help you be better financially prepared when the expected, or even unexpected happens.

Staying in a hospital isn’t something most people plan for, but it happens. And whether it’s for a planned procedure, like a having a baby, or for an emergency, like an appendectomy, a hospital stay could impact your finances. If you were admitted to the hospital today, would you be prepared to cover the out-of-pocket costs that may come along with such an event?
 

What is Hospital Indemnity Insurance, and how can it help me?

While your primary health insurance may cover some of the costs of your stay in a hospital, it won’t pay for things like copays or deductibles. Then there are the expenses that can continue to add up during your stay and after, while you’re recovering — groceries, childcare, copays for follow-up visits. That’s where Hospital Indemnity Insurance can be helpful.

Hospital Indemnity Insurance is a type of supplemental health insurance that complements your primary health insurance. It pays you a fixed daily benefit if you have a covered stay in a hospital or other covered facility. After you file a claim for a covered stay, you could get a benefit paid directly to you so that you can spend it however you like. Hospital Indemnity Insurance can help cover the out-of-pocket costs that can result from a stay in the hospital.

There may be benefit maximums, exclusions and limitations to coverage, so be sure to check with your employer or review your certificate of coverage and any riders for full provisions. Hospital Indemnity Insurance is not health insurance and does not satisfy the requirement of minimum essential coverage under the Affordable Care Act.

What does Hospital Indemnity Insurance cover?

Coverage will vary, but as an example, we’ll show you some of the options that may be available with Hospital Indemnity Insurance:

• Daily admission and confinement benefits for a covered stay at a:
  • Hospital*
  • Critical Care Unit (CCU)*
  • Rehabilitation Facility*
• Newborn coverage
• Confinement-related daily benefits for:
  • Childcare, lodging, pet boarding
• Nonconfinement daily benefits
  • Follow-up doctor visit, outpatient surgery visit, urgent care and emergency room visit.
• Mental health and substance use care benefits:
  • Confinement benefits for mental health and substance use disorder treatment at a covered facility
  • Nonconfinement daily benefits for outpatient rehabilitation facility therapy services at a rehabilitation facility due to treatment of sickness, injury, mental health disorders or substance use disorders

The admission and daily confinement benefit amounts may depend on the type of facility and the number of days of confinement, and any combination payable will typically not exceed a specific total number of days as presented in the Certificate of Coverage.

How can I get Hospital Indemnity Insurance?

Like other kinds of supplemental health insurance, Hospital Indemnity Insurance may be offered through your employer. You can usually enroll when you start a new job and make your other benefits selections, and/or after that, during your employer’s annual enrollment period. Hospital Indemnity Insurance premiums can be paid by the employer, paid by the employee or a combination of both.

Who can be covered under my plan?

In addition to yourself, Hospital Indemnity Insurance may be available for your spouse and your dependent children. The definitions of “spouse” and “children” may vary by plan or by state, so talk with your employer to verify who can be covered on your plan. You may need to be enrolled for coverage to enroll your spouse and/or children.

One more thing to consider: The workplace benefits and savings connection

Whether you’re just learning about supplemental health benefits like Hospital Indemnity Insurance or actively planning to enroll in them, have you ever thought about the connection of how these coverages have the potential to impact your retirement savings?

While Hospital Indemnity Insurance is a separate insurance product with a distinct purpose and benefits that are paid for specifically covered events. However, the benefit may help lessen the financial impact of a hospital stay, and perhaps it will help you maintain your retirement savings or avoid hardship withdrawals, as you encounter out-of-pocket costs. Considering your workplace benefits and retirement savings together could help you make more informed financial decisions, for today and tomorrow. 
 

Check with your HR department to find out if you have the option to enroll in Hospital Indemnity Insurance during your employer’s next open enrollment period.