During flu season, Herman traveled across the country on a business trip. When he returned home, he fell seriously ill with pneumonia and spent five days in the hospital. Between medical tests, medication, and interventions, the out-of-pocket costs not covered by his primary medical insurance were $440 per day, for a total of $2,200. Like most people, Herman didn’t plan for these expenses in his monthly budget.

If an injury or illness landed you in the hospital for a night or two—or even longer—how would it affect you financially? Sudden hospital visits aren’t uncommon, and the unexpected costs could add more stress to a difficult situation. That’s where hospital indemnity insurance can make a difference.

Fortunately for Herman, he had enrolled in hospital indemnity insurance during his employer’s annual enrollment period. It paid $300 for each day of his hospitalization, which saved him $1,500—or 68% of the total cost of his stay. The reduced financial burden helped him focus more on getting well and less on his expenses.


This example is for illustrative purposes only and is meant to provide a general overview of how hospital indemnity insurance works.

How does hospital indemnity insurance work?

Hospital indemnity insurance is supplemental insurance you can purchase in addition to your primary medical insurance. It pays you a fixed dollar amount for each day of a hospital stay lasting 24 hours or more—up to a maximum number of days per year.

There are usually no preexisting condition limitations, no health questions to answer and no medical tests to take. Benefits are paid no matter what other coverage you have, and you can visit any hospital or covered facility, in network or not.

What does hospital indemnity insurance cover?

While they may vary by the providing insurer, covered facilities and treatments typically include:

  • Intensive care units (ICUs): Heart attacks, strokes, serious injuries, respiratory failure and other serious conditions
  • Substance abuse facilities: Detoxification and residential addiction treatment
  • Mental health facilities: Anxiety, depression, eating disorders and schizophrenia
  • Nursing facilities: Physical therapy, occupational therapy, speech therapy and medication
How do you get it?

Many employers offer this optional coverage as part of their benefits package. Plans are generally voluntary, and the premium is deducted from your paycheck. Remember that these policies may differ by provider and are often customized for each employer, so make sure you understand what’s included before you opt in.
Some insurance companies also sell individual policies directly to the customer. If you decide to purchase one, make sure you understand what’s covered and what your benefits are. And keep in mind that group insurance coverage through your employer is generally less expensive and can be paid for through convenient payroll deduction.

It’s important to note that hospital indemnity insurance is not a substitute for health insurance. It’s meant to supplement your primary health plan.

A plan for the unexpected

If you end up in a hospital, your focus should be on your recovery, not your medical bills. If you’re concerned about the impact of an unexpected hospital stay and its related costs, hospital indemnity insurance can give you and your family some financial peace of mind.

To learn more about this coverage and other voluntary insurance benefits that may be available through your employer, talk to your human resources department.

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