Hospital indemnity insurance is gaining in popularity as a way to deal with increasingly higher out-of-pocket expenses. It’s not health insurance, but it provides a cash benefit you can use to pay for expenses health insurance doesn’t cover.
The Centers for Disease Control and Prevention estimated that the average hospital stay in 2017 was five days and cost more than $30,000. Inflation alone has made that number even higher today. Few families are prepared for such costs. In a February 2021 study conducted by West Health and Gallup, 18 percent of Americans said that they had serious financial challenges when trying to pay their medical bills, even with health insurance.
One reason medical expenses are a challenge for many people is that health insurance companies limit what they will pay for many services. Also, as premiums have increased to keep pace with higher costs, consumers have been opting for higher deductibles (the out-of-pocket amount a policyholder must pay before insurance kicks in) to keep premium costs down. The average deductible for a bronze Obamacare policy in 2019 was $5,900. Other costs policyholders must pay are coinsurance, the percentage of costs paid after the deductible is met, and the copay, a fee that must be paid for a covered health care service.
Hospital Indemnity Insurance pays you directly when you go to the hospital. Policies differ, but most pay you for any of the following:
• Hospital confinement
• Hospital outpatient costs
• Emergency room or urgent care treatment
• Rehabilitation at a qualified facility
• Physician care for covered accidents and illnesses