Hospital indemnity insurance has been around for awhile.

Long ago, it was just basic supplemental insurance if you were admitted to the hospital.

Today, hospital indemnity insurance has expanded to include other types of coverage. That is why they are known today as GAP insurance plans. Coverage includes:

• outpatient surgeries
• doctor visits
• lab services
• imaging services
• and a lot more

You can have basic coverage or all the way up to robust coverage. Regardless of what you choose, the intention of hospital indemnity insurance is still the same:

to help you cover dedcutible, coinsurances, and other out-of-pocket expenses associated with your underlying health insurance

There are a couple of ways plans pay a benefit.

One way is an indemnity benefit. All this means is that the carrier pays a fixed dollar benefit to you upon a covered event. It doesn’t matter what your underlying health insurance pays or covers.

You are admitted to the hospital. The plan pays $5,000 lump sum for hospital admission. This is what you receive.

The second way is a “bank” or “bucket of money” approach. This isn’t common, but a couple  of carriers offer this. It coordinates with your underlying health insurance. The advantage is that your out-of-pocket expenses could be covered 100%.

You are admitted to the hospital. The bill, after health insurance pays, is $2,576. Your plan pays $2,576.

Hospital indemnity plans have grown and become more flexible. Did you know a hospital indemnity plan can be a good alternative to short-term disability insurance? Or, that women can enhance pregnancy coverage by using a hospital indemnity plan?

Don’t be confused. Hospital indemnity and GAP insurance are typically the same and used interchangeably. They are also usually affordale coverage, too.