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Hospital Indemnity Insurance: How It Works

The burden of medical debt

A hospital stay can stir up a whirlwind of emotions and worries for the patient and their loved ones. The impending medical bills just compound the stress, bringing financial pressure that can linger for months or even years following treatment.

Nearly three in four adults who have past-due medical debt report owing at least some of that debt to hospitals, according to the Urban Institute. Nearly 28 percent of those people owe hospitals only and more than 45 percent owe hospitals as well as other providers. Adults with past-due hospital bills generally have much higher total debt than those with past-due bills owed to non-hospital providers.1

Hospital indemnity insurance can help in these situations. But many people aren't familiar with this type of coverage, and don't understand how it works. Read on to learn more about hospital indemnity insurance and how it can help protect you and your family.

Woman in hospital bed looking out of window

How hospital indemnity coverage works

Indemnity means to secure or protect against a loss or other financial burden. That's exactly what hospital indemnity insurance does. It helps protect finances for individuals and families when faced with a hospital stay.

Here's how it works: An insured person is admitted into a hospital for a minimum of 24 hours and the coverage pays benefits directly to the insured person.* The money can be used for anything the recipient wishes.

When setting up a group hospital indemnity insurance plan, employers have flexibility with things like benefit amounts and total days payable. This customization allows employers to develop a plan that balances coverage options and the premium rate employees will pay.

Here are some benefit options that hospital indemnity insurance may include.

  • Daily hospital confinement: Pays a benefit for each day of an inpatient hospital stay. Some plans may pay a separate benefit for the first day of an inpatient stay.
  • Hospital intensive care: Pays for an admission to a hospital intensive care unit, usually in addition to first-day confinement and daily hospital confinement benefits.
  • Wellness benefits: Wellness riders pay benefits when insureds complete one of many preventive care exams, such as mammography, colonoscopy, lipid panel tests and more.
  • Surgery benefits: Pays for surgeries performed in a hospital or an ambulatory surgical center.
  • Mental and nervous disorder: Pays benefits for an inpatient stay in a hospital or similar facility for mental or nervous disorder treatment.
  • Drug addiction and alcoholism: Pays benefits for an inpatient stay in a hospital or similar facility for the treatment of drug addiction or alcoholism.

Individuals and families shouldn't have to worry about the financial burden of a hospital stay. And choosing not to seek treatment because of financial stress can be catastrophic. Group hospital indemnity insurance can help people protect their HSA (Health Savings Account) and other savings with real benefits that help provide peace of mind.

Contact a sales representative to learn more about Group Hospital Indemnity Insurance and other coverage options from Allstate Benefits. Are you in good hands?®

*All limitations and exclusions apply to any coverage issued. Benefits are not paid for emergency room treatment or outpatient procedures.

1Urban Institute. Medical Debt Report, March 2023.

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