What is Hospital Indemnity Insurance?
Hospital indemnity coverage is a form of supplemental insurance policy devised to fill in the gaps in traditional health insurance plans.
What does hospital indemnity insurance cover?
Hospital indemnity insurance provides fixed dollar proceeds for the days you are in the hospital up to a specified period in accordance with your policy. Some plans have additional benefits, such as surgery cost coverage or skilled nursing home benefits, while others have additional benefits relating to medical tests and outpatient surgical procedures.
Hospital indemnity insurance policies may cover deductibles and co-pays, but can also offset other costs, like child care, elder care, travel expenses and loss of income. Some plans may cover higher tier medications as well as alternative, holistic and experimental treatments.
How does hospital indemnity insurance work?
As a supplemental policy, hospital indemnity insurance is available to purchase on an individual or group basis. This type of fee-for-service policy is different than most traditional health insurance policies as payment is made directly to the insured, rather than the hospital or medical provider. If desired though, many plans will pay the provider upon request. However, if you are hospitalized, you must typically file a claim to reap coverage.
Hospital indemnity insurance coverage is set up with two main components. The first is a flat cash payment for hospital confinement, while the other is a per diem allowance.
In addition, hospital indemnity policies are set up for a specific use. For example, when you are admitted to the hospital for a sickness or accident. The proceeds are commonly used to help cover out-of-pocket expenses associated with hospital admission and confinement.
Unlike some traditional health insurance plans, hospital indemnity insurance typically allows you to choose any physician, specialist or medical facility for treatment as long as you are eligible for the services. While this type of plan may cost more than other health plans, such as an HMO, the reward is in the flexibility of choices.
It's important to know that hospital indemnity insurance benefits are separate and distinct from benefits paid under a traditional health plan.
What are the limitations of hospital indemnity insurance?
Some hospital indemnity insurance plans contain provisions on either the maximum number of covered days in the hospital or a maximum payment figure, or both. Further, some hospital indemnity insurance plans do not cover preventative services, such as routine exams or screening tests, designed to prevent a medical condition or illness.
Why do I need hospital indemnity insurance?
Hospital indemnity insurance provides additional coverage -- and peace of mind -- in event of surgical complications, and is often paired with supplemental maternity plans. This type of coverage can provide mental freedom in the event of a complications during pregnancy that require hospitalization, whether it is prior to delivery, the result of a premature birth or multiple births.
In addition, seniors often obtain a hospital indemnity insurance plan to cover the gaps in Medicare part A and Medicare part B.
Because many traditional health plans have gaps in hospitalization coverage, a hospital indemnity insurance plan can help fill in these holes. Hospital indemnity plans are also often a complement to other major medical health plans, such as short term disability, long term care and limited benefit plans.
It is important to closely examine your hospital indemnity insurance policy to understand what all is covered, what is excluded, and what restrictions or limitations exist.