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.

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 $8,550 for an individual, and $17,100 for a family, in 2021.

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 $17,000, depending on where you go and where you live. A cesarean section, which accounts for almost 32% of 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

According to The National Safety Council’s preliminary numbers in 2020, more than 4 million people were injured in a car wreck. In 2019 there was an estimated $463 billion in motor-vehicle injury medical costs.

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 going forward.

Putting aside the pandemic, the average cost of a less serious pneumonia hospitalization can be around $13,767.

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 70,000 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 $28,000; 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.

11 Responses to "Hospital Indemnity in Real-Life: Four Scenarios That Could Happen to You"
    • Sambo | June 8, 2021 at 1:24 pm

      What hospital indemnity insurances you recommended?

    • Angie Jackson | April 12, 2021 at 1:07 pm

      Does Hospital Indemnity help towards procedures such as a catheterization? or an ER visit that is related to a heart condition?

      • LifeLime Team | April 28, 2021 at 3:21 pm

        Hi Angie. Thanks for your question. The primary purpose of a Hospital Indemnity plan is to provide a scheduled indemnity benefit for each day of confinement in a hospital. In order to receive a benefit, you must be confined in a hospital as defined by your policy, this may vary based on the specific policy language, but normally requires a twenty-four hour stay. Some policies have optional scheduled indemnity benefits for confinement in other types of medical facilities, or for a visit to a physician’s office or emergency room, this will depend on your employer’s plan. Any benefit paid by a Hospital Indemnity plan can be used however the insured chooses. Please note that the product is designed to pay for confinement and is not intended to provide expense nor indemnity benefits for specific treatments of an illness or injury.

    • Geanna G | December 3, 2020 at 11:47 pm

      I’m having a hard time finding conditions covered. If I were to be hospitalized with COVID-19, would my stay be covered?

      • Laura Benware | December 18, 2020 at 7:43 pm

        Good afternoon, Geanna. Thank you for your question. Hospital Indemnity policies may cover hospital or ICU confinements related to injuries that are the result of an accident and most illnesses, including COVID-19. Most policies do not contain a specific list of conditions covered, as any illness or injury would be covered except for those specifically excluded by the plan an employer chooses to offer their employees.

        Exclusions can vary significantly by plan, but typically include (but are not limited to) any illness or injury caused by: suicide or self-infliction, voluntary intoxication, illegal activity or extreme sports or similar high-risk activities, etc. Benefits are also typically not payable for: elective or cosmetic procedures, except for reconstructive surgery, fertility or sterilization procedures, alternative medicine or medical malpractice, etc.

        The benefits and amounts covered, as well as applicable limitations and exclusions, vary by employer and are determined by the plan the employer chooses to offer their employees.

        1
    • 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?

      • Laura Benware | December 16, 2020 at 4:59 pm

        Hello Myrinda. Thank you for this inquiry, and sorry to hear that your husband is having back issues. I think we address the answer to your question in an earlier comment, but let us know if we can answer anything else for you.
        “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.”

    • 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?

      • Laura Benware | December 18, 2020 at 7:38 pm

        Good afternoon, Lindsay. Thank you for your question. Hospital Indemnity policies may cover the employee, spouse, partner, and/or children if the family plan option was selected upon enrollment. Although policy terms may vary, each covered person is often eligible to file a claim up to the maximum days permitted annually (for example, up to 30 days of hospitalization per person per year) as defined by the policy provisions. Provided your child is enrolled and eligible for coverage at the time of your child’s hospitalization, your child’s period of confinement would be eligible for claim consideration as its own claim.

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

    • 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.

        1
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