The short answer
Hospital indemnity insurance pays you a set cash benefit when you're admitted to the hospital for a covered stay. The money is paid directly to you, and you can use it for anything: hospital copays, deductibles, transportation or bills at home. It's supplemental coverage, not a replacement for health insurance or a Medicare Supplement.
Written by Alan Roy, independent licensed insurance agent (FL #W937474) · Updated
How does hospital indemnity insurance work?
When you have a covered hospital admission, the policy pays a fixed amount, usually per day or per stay, regardless of what your other insurance pays. You choose the benefit level when you apply, and the premium is based on that choice.
Why do people on Medicare Advantage consider it?
Many Medicare Advantage plans charge a daily copay for the first several days of a hospital stay. A hospital indemnity policy can pay you cash to help cover those costs, so a hospital stay doesn't strain your budget.
What should I check before buying?
- How much it pays per day or per admission, and for how many days
- Any waiting periods before benefits start
- Pre-existing condition limitations
- Whether it also pays for things like outpatient surgery or observation stays
- How the premium compares to the hospital costs you're trying to protect against
Who it may fit
- You're on a Medicare Advantage plan with daily hospital copays
- You want cash on hand if you're hospitalized
- You'd find an unexpected hospital bill hard to cover from savings
How Alan helps
- Looks at your current plan's hospital costs first, so you only buy what you need
- Compares benefit levels and premiums from the companies he represents
- Explains waiting periods and limitations before you apply
Frequently asked questions
Is hospital indemnity insurance a Medicare Supplement?
No. It's a separate supplemental policy that pays fixed cash benefits. It's not a Medicare Supplement (Medigap) policy and doesn't replace one.
Who gets the money?
Benefits are paid directly to you, not to the hospital, so you decide how to use them.
Can I have it with Medicare Advantage?
Yes. It's commonly paired with Medicare Advantage to help with hospital copays. Alan discusses it separately from your Medicare plan review if you're interested.
Hospital indemnity insurance is a limited-benefit supplemental policy. It is not a Medicare Supplement policy, does not replace major medical or Medicare coverage, and does not satisfy any requirement to have health coverage. Benefits, waiting periods, limitations and exclusions vary by policy.
This product is not a Medicare plan and is not connected with or endorsed by the U.S. government or the federal Medicare program. Coverage is subject to the terms, conditions, limitations and exclusions of the policy, and availability varies by state.