Hospital Indemnity Insurance, Explained

How It Works

I look at it as another layer of protection. Your primary health coverage handles benefits according to the plan, while hospital indemnity coverage can help offset some of the out-of-pocket costs that may remain. The cash benefit is paid according to the terms of the policy and can generally be used however you choose.

The goal isn't to replace your Medicare or other health coverage. It's to help round out your overall protection so an unexpected hospital stay may have less impact on your budget.

A policy may provide benefits for covered events such as hospital admission, hospital confinement, or other covered services, depending on the specific policy. Actual benefits, amounts, and covered events vary by policy — not every hospital indemnity policy provides identical coverage.

Who Considers Hospital Indemnity Coverage

It's often chosen by people on a Medicare Advantage plan who want an extra layer of protection against out-of-pocket costs during a hospital stay, since Advantage plans can have per-day copays for inpatient care. It can also make sense for anyone who wants a cash cushion for the unpredictable costs that come with a hospitalization.

How It Fits With Your Other Coverage

Hospital indemnity insurance isn't a replacement for Medicare — it's a supplement that works alongside whatever Medicare coverage you already have, whether that's Original Medicare, a Medicare Supplement plan, or Medicare Advantage. Whether it makes sense for you depends on your existing coverage and your comfort with unexpected costs.