It can be challenging to understand all the benefits available in the workplace. And if you’re not an expert at group supplemental health insurance benefits, including accident, critical illness and hospital indemnity, you’re not alone. This article, which is the third in a three-part series, will focus on hospital indemnity insurance and provide helpful insights.
Group hospital indemnity insurance provides a predetermined daily payment while an insured individual is hospitalized. The benefit can be used to help pay out-of-pocket and non-covered costs, plus additional living expenses. Typically, no health questions are asked during an eligible event, more than one benefit payment may be available for a single hospital stay and covered dependents receive the same benefit amounts as employees. Premiums are usually paid by employees and elected annually during the open enrollment period.
A sampling of common coverage options includes:
- Admission not required to receive benefits
- Mental health benefits, both outpatient and inpatient
- Newborn hospital stay coverage for child and birthing parent
- Adult companion lodging
- Rehabilitation therapy
The fact that approximately 14 million people in the U.S. owe over $1,000 in medical debt and about 3 million people owe medical debt of more than $10,000,1 any means of protection against medical-related expenses is worthy of consideration, including hospital indemnity insurance.
Hospital indemnity insurance can help protect financial security
A review of potential hospitalization scenarios helps build the case for this coverage.
When it comes to hospitalization, we typically think about adults undergoing a procedure/treatment or health issues for elderly parents or grandparents. Regardless of who is involved, there are related expenses, and many times the hospitalization is unexpected. One of the most stressful situations is when a child is hospitalized. And when a child is ill, they’re likely part of a younger family with typical payments like child care, rent/mortgage, credit cards, student loans and more, and the unexpected expenses can have a greater impact.
In a report analyzing data prior to 2019, within the newborn to age nine cohort, respiratory conditions were key triggers for hospitalization, with bronchitis, pneumonia and asthma being near the top of the list of reasons, and for children age 10–17, mental disorders topped the list.2 This data, of course, did not include the COVID pandemic. According to a U.K. study released in 2023, “risk of severe disease from SARS-CoV-2 infection in children and adolescents in England remained low. Children and adolescents with multiple medical problems, particularly neurodisability, were at increased risk.”3
While the prevalence of childhood hospitalization is not as high as for other populations, the impact of a child’s hospitalization on a family cannot be understated. From the direct cost of the hospitalization itself — including deductibles and coinsurance, to the indirect costs of time off from work for a parent or caregiver, parking, food, child care for other family members and pet care — there can be a huge financial stress on a family.
That’s where a hospital indemnity plan can help. Most plans pay a higher dollar amount for the first day of hospitalization, say $1,000, and a lower daily benefit of $100 for each day thereafter up to an annual cap. Stays in the ICU typically have a benefit that is double that of a standard hospital stay. So, for a hospital stay of four days, which is the average cited by the Agency for Healthcare Research and Quality, a family could receive $1,400:
- $1,000 for the initial confinement
- $100 for each day of hospitalization ($100 x 4)
And those benefits could be double for an ICU admission and stay.
Additional optional coverage — selected at the employer level — could provide benefits for child care or pet care, or hotel stays near the hospital for a caregiver.
Combined, these benefits can help relieve a portion of the burden that a family may experience with the hospitalization of a child, or any family member. And the benefits are payable directly to the employee, who can chose to spend them how they want. If the underlying medical plan is rich or if the out-of-pocket has already been met, the employee could use some dollars to offset lost time from work or other expenses that may accumulate.
On the more positive side of hospital indemnity insurance, coverage is frequently available for newborns and birthing parents, and a few providers now offer proactive payments for routine labor and delivery once a birthing parent reaches a specific point of gestation.
Summary
Hospitalization of any family member is stressful and potentially costly. Hospital indemnity insurance can help lessen the financial impact, and that’s particularly important for young families likely facing a wider range of everyday living expenses. Additionally, regardless of the patient, the financial assistance provided by hospital indemnity insurance can help individuals be more present for their loved ones, stay focused on supporting recovery rather than financial worries and reduce stress for all involved. And when it comes to childbirth, payments can help people stay fully engaged in the joy of welcoming a new family member.
