Hospital indemnity insurance is coverage that can help safeguard your finances by providing you with a lump-sum payment—one convenient payment all at once—when you or your family need it most. The extra cash can help you focus on getting back on track — without worrying about finding the money to cover the costs of treatment. A flat amount is usually paid for a hospital admission and a per-day amount for your entire hospital stay. And best of all, the payment is made directly to you, and is in addition to any other insurance you may have. It’s yours to spend however you like, including for your or your family’s everyday living expenses.

Emergency room visit A benefit is paid if you have to go to the emergency room for treatment.
Outpatient procedure Benefits might be paid for certain outpatient procedures.
Specified disease Normally specified disease policies are stand alone policies but you may see benefits for certain critical illness.
Accidents As with specified disease, normally benefits for accident payments are in stand alone accident policies but it’s possible some benefits might be paid under a hospital indemnity plan.

Recently, my wife had an unexpected trip to the hospital. After taking her to the emergency room, she was admitted to the hospital. She spent six nights in the hospital, three of which were in intensive care.

Once she recovered, the hospital and doctor bills started arriving. I think all the medical bills totaled more than $30,000. On our medical plan, we have a $3,000 deductible. This meant that of that $30,000 or so, $3,000 is our responsibility and

we will be expected to pay it.

On top of that, one of the emergency room doctors was considered out of network which added another $1,200 above and beyond our deductible we shouldn’t be responsible for but are.

While my wife was in the hospital, she also missed six days of work. While she had enough sick time to cover her pay, her short term disability wouldn’t have kicked in until after 7 days and my wife was back to work by the 7th day. Because of that she wouldn’t have qualified for any payments from her short term disability plan.

A hospital indemnity plan would have paid us some cash to offset these expenses. Most likely she would have received cash for being admitted, staying overnight and

a little more for each night of intensive care treatment that was required.

Without a hospital indemnity plan, those expenses have to be paid completely by us.

High deductible health insurance plan The number one reason to consider a hospital indemnity plan is if you have a high deductible plan. This is for two reasons. Most people don’t have that kind of money set aside and if you even if you have that much money set aside in a health savings account, you can maybe protect it assuming it’s an HSA compliant plan.
Planning on getting pregnant If you are planning on getting pregnant, a normal childbirth is two days in the hospital while a C-section is likely four. Unlike short term disability plans, group hospital indemnity plans don’t usually have a pre-ex that would exclude pregnancy.
Over 50 years old Once you start getting older, the more likely it is you’ll get admitted to the hospital. Statistics show that once you reach the age of 50, there’s a greater than 10 percent chance you’ll be admitted to the hospital. And that percentage goes up each year you get older.
Upcoming surgery If you know you are going to have a knee replacement or some other surgery you have control of when it happens, you might want to consider it.
You have a chronic condition If you have heart issues, diabetes are on medications for other types of conditions, you are more likely to be admitted to the hospital. Here’s another study done by the AARP that shows the most common reasons older adults are admitted to the hospital.
You missed open enrollment Sometimes, people miss open enrollment. If a hospital indemnity plan is offered to you during an off cycle enrollment, you might consider it. While not a replacement for health insurance, at least it’s something.
It’s guaranteed issue If it’s guaranteed issue and you have some major medical problems you might want to consider it. It could help you get through pre-ex period on a critical illness policy for example.
If it’s inexpensive If the cost is reasonable, then consider purchasing a policy. You are more likely to find that the basic core plans aren’t that expensive. Some of seen are under $200 per person per year which isn’t too expensive.
No cash saved or to replace lost income If you don’t have much sick time or don’t have short-term disability, you might consider it. While it’s not disability insurance, it would still provide some cash you might need.
Unexpected out of network expenses Even with a good medical plan, medical providers will still try and stick you with some unexpected expenses like my wife discovered when she got a bill from an out of network provider when she went to an in network facility for treatment.