Hospital Indemnity Insurance Explained
Hospital indemnity insurance pays you cash when you're in the hospital.
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You can use the money from a hospital indemnity plan to pay for things your health insurance won't cover. You can use the money to pay your health insurance deductible, for example, or for the cost to hire help around the house while you recover.
What is hospital indemnity?
Hospital indemnity insurance is a type of extra policy that pays you directly when you're in the hospital.
Most policies pay you by the day. This means you'll get a set amount, like $200, for every day you're in the hospital. You can use the payout from hospital indemnity plans for anything. You could use it to pay the deductible or coinsurance from your main health insurance plan, or you might want to use it for groceries, travel costs or to replace the income you missed out on while you were in the hospital.
What do hospital indemnity policies pay for?
You can use the money from a hospital indemnity plan for whatever you want.
Because the plans pay you directly, you aren't limited in how you use the money.
Hospital indemnity plans pay you when you stay in the hospital, whether or not you need surgery. Intensive care and critical care stays are also usually covered. Some policies might pay out because of other things like outpatient care and emergency room visits.
Hospital indemnity policies pay out if you go to any hospital and don't restrict you to a certain network of doctors. That's different from PPOs and HMOs, the most common kinds of policies.
Hospital indemnity policies pay you directly instead of paying the hospital, like health insurance. You get a set payment after you get a certain type of care. For example, your policy might pay $200 for every day you spend in the hospital. That money is yours to spend as you please.
The biggest difference between accident and hospital indemnity insurance is that accident coverage pays out after specific accidents, while hospital indemnity coverage pays out after certain types of hospital stays. Both are kinds of supplemental health coverage that pays for costs your regular medical insurance won’t cover.
Accident insurance pays out after certain injuries, such as a broken limb, a burn or whiplash.
By contrast, hospital indemnity pays when you go to the hospital for certain things, usually called inpatient hospital care.
Both policy types give you cash payments you can use for your deductible, copays, coinsurance or everyday life expenses like food, rent and transportation.
Supplemental health policies don't follow the same rules as regular medical insurance. For example, both accident and hospital insurance can deny you coverage or charge you higher rates because of a preexisting condition. On the positive side, supplemental coverage tends to be much cheaper than regular health insurance because it pays for fewer situations and doesn't pay you as much.
Are hospital indemnity plans worth it?
Hospital indemnity plans are often worthwhile if you still have high medical bills after your main health insurance policy pays for your care.
You might also want to consider supplemental coverage if you have a chronic illness or if you’d struggle to pay a large, unexpected bill.
Hospital indemnity insurance example
In America, the average cost for a hospital stay is $3,132 per day before insurance. If you have insurance, the most you'll pay for your medical care in 2025 is $9,200, although your specific plan may have a lower limit.
If you have a $2,000 deductible and 20% coinsurance, you would hit that $9,200 figure in about 12 days. A hospital indemnity plan that pays out $300 per day would give you $3,600, bringing your total share of the bill down to $5,600.
But it's also possible you'll never use a hospital indemnity plan. You could buy a plan and pay the monthly rate every month but never be admitted to the hospital. You'd never get use out of the plan despite spending money on it every month.
How to find the best hospital indemnity insurance
To get the best coverage, compare several plans from different hospital indemnity insurance companies.
You can buy a plan from many large companies, like Aetna and Cigna.
- Aetna
- Aflac
- Allstate
- Anthem
- Cigna
- MetLife
- Mutual of Omaha
- UnitedHealthcare
Check to see if your employer offers indemnity coverage through a group plan. Those plans tend to be cheaper than a plan you buy yourself. If your job doesn’t offer hospital indemnity insurance, you can buy a policy directly from an insurance company.
As you compare plans, look at how much a plan pays out each day and what types of hospital stays are covered.
Coverage details vary a lot from plan to plan, so it's important to carefully review your options before you buy. Hospital indemnity plans have several features you should consider, in addition to the monthly rate.
- Payouts: Plans pay you a daily cash amount during your hospital stay. Payouts commonly range from $100 per day to $1,000 or more.
- Covered services: One policy might pay out for an ambulance ride and an emergency room stay, while another will only pay for the time you're actually staying in the hospital.
- Time limits: Hospital indemnity plans often have time limits for coverage. For example, one policy may only pay for 90 days in the hospital per calendar year, while another covers 180 days.
- Age restrictions: Some policies pay out a lower amount after a certain age, like 65 or 70.
- Deductibles: Most hospital indemnity plans have no deductible, which means they start paying you as soon as you go into the hospital. Every plan is different, though, so it's important to check if the plan you're considering has a deductible.
Frequently asked questions
What is hospital indemnity insurance?
Hospital indemnity insurance is a plan that pays you directly when you're in the hospital. You can use it together with your main health insurance policy to lower your out-of-pocket expenses, such as your deductible, copay and coinsurance. Or you could use the money to pay for things like food, transportation, childcare or medical supplies.
What does a hospital indemnity plan cover?
Hospital indemnity plans generally cover hospital stays, including childbirth and other forms of inpatient care. Payments are made directly to you. You can spend the money however you like, although it’s typically used for living expenses or to pay for your primary insurance policy’s deductible, copay or coinsurance.
Is indemnity hospital insurance the same as medical insurance?
Hospital indemnity insurance is a type of supplemental health coverage. It doesn't give you the same level of coverage as traditional health insurance. Your main health insurance plan still pays for most of your hospital stay and medical bills. Hospital indemnity insurance pays you an extra amount to help you out with other costs like food and travel.
Methodology
The average cost of a hospital stay per day comes from KFF. Out-of-pocket maximum limits for 2025 are from HealthCare.gov.
Editorial note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.