If you’re hospitalized and have Medicare, your Part A plan covers a large part of your expenses. It helps with care, including inpatient hospital visits, skilled nursing facilities, and hospice. Most people who are 65 and older don’t have to pay for premiums, but you will have deductibles ($1,736 in 2026) and coinsurance for some treatment, especially if you have longer-term stays. 

One option to help cover those out-of-pocket costs for hospital stays is hospital indemnity insurance. Here’s what you need to know about what hospital indemnity insurance is, how it works with Medicare Part A, and why you should consider this coverage. 

What is hospital indemnity insurance?

The supplemental hospital insurance is there to cover the gaps in costs not covered by Medicare Advantage and traditional Medicare Part A plans — and the money is paid directly to you, not your doctor or hospital. It covers a wide range of services beyond what Medicare pays for, including: 

• Copays and deductibles
• Transportation
• Therapy
• Lodging
• Housekeeping 
• Groceries
• Medical testing
• Household bills
• Out-of-network treatment

While hospital indemnity insurance can help you save thousands a year, particularly if you have an unexpected hospital stay, coverage isn’t expensive for most people. For individuals, it typically runs between $10 and $20, and between $20 and $40 for families.  

How hospital indemnity and Medicare work together 

Instead of thinking of these as competing insurance coverages – hospital indemnity insurance vs. Medicare Part A – you can consider them as cooperating to help you pay less for hospital stays. 

Here’s what coverage will look like if you have both plans:

• You are hospitalized for five days. 
• You are required to pay a $325 copay for each of those days if you haven’t met your deductible. 
• Your hospital indemnity insurance sends you money to pay for those medical bills, or $1625. 

Another possible scenario could include:

• You go into the hospital for hip replacement surgery.
• You need outpatient physical therapy after the procedure, which costs $2,000, plus you have to pay for transportation to get to and from physical therapy and follow-up doctor’s appointments. Medicare pays for 80% of the therapy and none of the transportation.
• Your hospital indemnity insurance sends you money to cover your 20% therapy coinsurance plus any transportation costs you incur.

Hospital indemnity insurance also pays you relatively quickly after your treatment. When you provide documentation – like medical bills – and are approved, you will usually be paid within a few weeks.

Why consider hospital indemnity? 

You may still be asking yourself: how do I know if hospital indemnity insurance is worth it for me? This coverage helps pay for a range of coverage gaps that can add up to large medical bills. Your coverage will vary depending upon your plan, but along with hospital stays, it also typically helps with some outpatient surgeries, diagnostic tests, ER visits, and inpatient surgery you may need while you’re admitted to the hospital.  

Hospital indemnity coverage may be particularly beneficial if you:

• live on a fixed income.
• have a chronic health condition, like heart disease or cancer, that can require hospitalization.
• have a history of frequent hospital stays.
• have a Medicare Advantage plan that requires you to cover hospital copays or ambulance rides.
• have limited savings to cover unexpected health expenses.                                    

Another benefit of having hospital indemnity insurance is that it provides flexibility. The money is paid to you in a lump sum or daily, so you get to choose how to use it to best fit your budget. 

Hospital indemnity insurance doesn’t replace your need for Medicare hospital insurance. But this coverage may provide an inexpensive safety net to reduce your out-of-pocket inpatient and outpatient hospital expenses. If you’d like to learn more about how hospital indemnity insurance could benefit you or your spouse, contact SmartMatch to see your options.