How Hospital Indemnity Works

Hospital Indemnity in Real-Life: Four Scenarios That Could Happen to You

Bana Jobe

Medical emergencies are tricky things—they often sneak up when we least expect them. Even still, unplanned hospitalizations are part of everyday life. Whether you get a nasty burn while cooking dinner or throw out your back moving furniture for a friend, we’re all an accident away from an unexpected hospital stay.

The stats say so, at least. According to the Agency for Healthcare Research and Quality (AHRQ), there are about 35 million hospitalizations each year. These don’t just hurt your body (or your pride). With an average hospital stay costing $10,900 per day, hospitalizations can also break the bank and lead to medical debt.

And while no one likes to be in the hospital, if you have a Hospital Indemnity plan you can help protect yourself from some of those unexpected costs.

A Hospital Indemnity plan is a voluntary insurance product. These plans pay a lump-sum cash benefit for covered hospital services in exchange for a monthly premium.

Doesn’t Health Insurance Cover Me?

Yes, but it also leaves some gaps. Before insurance covers its share, most people typically need to meet their deductible first. After that, coinsurance applies until they reach their plan’s out-of-pocket limits, which can be as high as $8,150 for an individual, and $16,300 for a family, in 2020.

Hospital Indemnity: How It Works

If your employer has offered a Hospital Indemnity plan to you as part of your employee benefits, give it some consideration. The extra peace of mind could help out in a variety of scenarios, including these common ones:

If You Have a Baby…

Happy parents with newborn baby

With babies born every minute of every day, childbirth is the top reason someone would find themselves in a U.S. hospital, reports the AHRQ.

And it can get pricey.

The average cost of a delivery ranges from $9,000 to $28,000, depending on where you go and where you live.

A cesarean section, which accounts for about 1 in 3 deliveries, can raise the cost even higher. Even with insurance, you’re still on the hook for applicable deductibles, coinsurance and copays.

A Hospital Indemnity plan pays out lump-sum benefits for designated childbirth hospitalizations or procedures can be a huge asset. Read your policy carefully. Some plans may stipulate which labor and delivery hospitalizations get covered—such as only covering neonatal intensive care unit (NICU) stays or other complications.

That extra protection could make a world of difference if you were to need it. On top of all the other costs and worries of having a baby, the last thing new parents should fret over is paying for an unexpected hospital stay while also racking up additional financial hardships (such as a loss of income from visiting the NICU or finding childcare for older children).

With cash benefits when you need them most, Hospital Indemnity helps absorb that financial shock so that you can focus on what matters: your growing family.

If You Crash Your Car…

Man in physical therapy after an accident

Every year, more than 3 million people get injured in a car wreck, according to the Centers for Disease Control and Prevention. In all, it leads to more than $75 billion in medical costs annually.

Sometimes, those costs may be more manageable—like if you get in a fender bender and only need a few stitches. But things can always get more serious depending on the extent of injuries. As difficult as it may be to imagine, you could need an ambulance or a costly stay in the intensive care unit.

Hospital Indemnity insurance can pay out benefits for both of those expenses, plus many more. That cash can not only help you pay for hospital bills, but it can also keep you going when you’re out of work, participating in rehab or need extra help at home, like with grocery delivery or housekeeping services.

You can use your plan’s payouts however you see fit. The check gets sent straight to you, giving you money and assurance when funds (and patience) are likely to run the lowest.

If You Get Pneumonia…

Woman Reading Get Well Soon Card

Pneumonia sends about 1 million adults to the hospital each year, half of them between 18 and 57 years old. And those statistics were from 2019, before COVID-19, which may raise the numbers even more for 2020.

Putting aside the pandemic, the average cost of pneumonia hospitalization can range from $5,000 to $15,000.

With those amounts so high, it’s no surprise that pneumonia hospitalization causes about 1 in 10 cases of medical debt.

But imagine: What if someone wrote you a check to help you cover those costs? That’s what Hospital Indemnity insurance does.

With the cash from your plan’s payout, you can focus exclusively on getting better without stressing about the cost of care. It also has your back when you’re not working so that you can keep paying for bills like:

  • Rent
  • Mortgage
  • Utilities
  • Groceries
  • And more…

If Your Child Gets Appendicitis…

Little girl recovering at hospital

Appendicitis happens to about 80,000 children each year, mostly to kiddos between 10 and 20 years old. It can be a scary experience for everyone, leading to emergency surgery, hospital stays and all the costly expenses in between.

An appendectomy could set you back as much as $31,000; some people have paid far more, even after insurance.

Typically, if you have access to a Hospital Indemnity plan through your employer, you can also purchase coverage for a spouse and dependents to help pay for situations like this. Plans can vary, check the policy to see how cash benefits would apply to others in your family.

Given all that goes into recovery and caregiving for a little one, the extra money will make a big impact, especially if you need to take off work during or after your child’s hospital stay.

Protect Yourself with a Hospital Indemnity Plan

While you can’t predict everything, you can protect your financial security—and your mental health—against the pressures of unexpected medical expenses. A Hospital Indemnity plan is a great way to do that.

But there’s so much more that Hospital Indemnity can do for you and your family than the four scenarios above. It can even help you avoid going into your savings or getting into debt. Consider any reason you might need to go to the hospital, planned or not, and the right policy can likely help you pay for part or all.

Nobody knows what will happen tomorrow, so wouldn’t a little extra protection put your mind at ease today?

The Modern Day Need for More Help

Hospital Indemnity: How It Evolved to Bridge Financial Gaps

This informational material shall not be considered financial advice. The Hartford assumes no responsibility for any financial, investment, or tax-related decisions. Those seeking resolution of specific financial, legal, tax, or business issues, questions, or concerns regarding this topic should consult their own financial, investment, tax, legal, or other business consultants, advisors, or other professionals.

4 Responses to "Hospital Indemnity in Real-Life: Four Scenarios That Could Happen to You"
    • Monica Dasenbrock | November 4, 2020 at 10:46 pm

      Does hospital indemnity coverage offer benefits for semi-elective surgeries? Such as recovery from knee replacement.

      • LifeLime presented by The Hartford | November 14, 2020 at 4:01 pm

        Hi Monica.

        Thank you for your question. Hospital Indemnity policies generally cover inpatient confinements related to non-elective surgeries. In general, if a surgery, such as a knee replacement, is recommended by a physician to maintain or improve quality of life, it will be considered non- elective under a Hospital Indemnity policy.

        Hospital Indemnity insurance usually pays a specified amount for the first day of hospitalization related to a scheduled surgery ($1,000, for example) and a smaller sum for each day up to a specified number of days ($150 per day for days 2-30 of your hospital stay, for example). They may also pay out specified amounts for related treatment such as diagnostic exams ($150, for example), follow-up visits ($75 per visit, for example) and physical therapy ($25 per session, for example).

        The benefits and amounts covered vary by employer and are determined by the plan the employer chooses to offer their employees.

    • Lindsay | November 20, 2020 at 7:42 pm

      I’m considering this plan for both myself and my family. If I were to be hospitalized and received the benefit and then later one of my children required hospitalization, would I be able to make a separate claim for my child and are they eligible for the same amount of the full benefit?

    • Myrinda Barnes | November 24, 2020 at 3:54 pm

      If my husband has back issues but they are stable right now, if in the future he ends up needing surgery for it is it covered under the Hospital Indemnity insurance? Would a back surgery be considered an “elective” procedure? Or is it still covered?

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