Hospital Indemnity Insurance

What it is

Hospital indemnity insurance is supplemental insurance sold by private insurance companies. It pays a fixed amount when you have a covered hospital stay or another event the policy covers. It is not part of Medicare and is not a substitute for major medical coverage.

How it generally works

• The policy sets the amount it pays, for example an amount for each day in the hospital or for each stay.
• The amount is defined by the policy. It is not based on your actual medical bills.
• Benefits are generally paid to you rather than to the hospital, and you decide how to use the money.
• Each policy defines which events it covers. A policy may have a waiting period, a limit on the number of days it pays for, and exclusions.
• An insurance company may ask health questions when you apply. Availability, benefits and underwriting vary by state and carrier.

Questions to ask

• Which events does the policy pay for?
• How much does it pay, and for how many days?
• Is there a waiting period, or a limit related to health conditions I already have?
• Can the premium change over time?