Health insurance can reduce the cost of healthcare services, including stays at the hospital. However, some plans and policies may not cover all of your costs, especially if you have an extended stay. In these cases, hospital indemnity insurance can help fill coverage gaps and reduce the overall cost of going to the hospital. Read on to learn more about the differences between health insurance and hospital insurance.

What is health insurance?

Health insurance is a policy provided by an insurance company that covers a portion of the policyholder’s medical expenses in exchange for monthly premium payments. Employers often offer health insurance as an employment benefit, or you can purchase an individual or family marketplace plan.

Health insurance plans can help you manage the rising costs of healthcare and protect you from large, unexpected expenses. Many health insurance policies involve sharing costs with the insurer through deductibles, copayments, coinsurance, and out-of-pocket maximums. These policies can vary significantly depending on the provider and type of plan, such as HMO, PPO, or high-deductible plans.

What does health insurance cover?

Health insurance typically covers a range of essential health benefits, including:1

  • Outpatient services
  • Emergency services
  • Hospitalization for surgery or overnight stays
  • Pregnancy, maternity and newborn care
  • Mental health and behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services
  • Chronic disease management
  • Pediatric services

It’s important to note, however, that what exactly is covered and coverage amounts vary by provider and plan. For instance, some plans may provide coverage for more extended hospital stays than others. Some insurers also require preapproval or notice for hospital stays or charge extra if you go to an out-of-network hospital.2

What is hospital indemnity insurance?

Your healthcare insurance provider may cover many costs associated with your hospital care after you make copays and deductible payments. However, they won’t cover collateral costs associated with a hospital stay, such as:

  • Childcare
  • Lost wages
  • Fixed living expenses like rent and utilities
  • Intensive care visits
  • Certain prescription drugs

This is where hospital indemnity insurance comes in. These insurance plans pay the policyholder, or other assigned beneficiary, a direct cash benefit to help manage hospital costs. Often offered by employers with premiums payable through payroll deductions, hospital indemnity insurance can be a good supplement to health insurance plans by giving you additional financial flexibility after a covered accident.

What does hospital indemnity insurance cover?

With a hospital indemnity insurance policy, you pay premiums to an insurance provider to keep your coverage active. Every plan is different, but usually these plans pay cash benefits when you are admitted to the hospital. You can then use these benefits to pay for treatment or procedures related to the hospital stay that are not covered by your health insurance plan, or living expenses.

Your coverage options may vary between insurers and your state, but generally can help cover the costs of intensive care, hospital confinement, prescription drugs, and more. Hospital indemnity insurance policies may also have special features like:

  • Coverage for family members
  • Ability to keep the policy if you move to another state
  • Expedited claim processing

Health insurance vs. hospital indemnity insurance

It’s important to realize that hospital indemnity insurance is not a replacement for health insurance. Your primary health insurance provider can help you reduce costs for a range of healthcare expenses, from prescription drugs and routine doctor’s visits to hospital stays. Hospital indemnity insurance provides supplemental coverage to support costs associated with hospital stays that your insurer may not cover. While supplemental coverage is designed to reduce the financial burden of a hospital stay, it doesn’t provide the same benefits as health insurance. Having both health insurance and supplementary hospital indemnity insurance can give you more comprehensive coverage should you need to go to the hospital.

The bottom line

An extended hospital stay can result in significant medical bills that your health insurance provider may not cover completely. When you make a claim, hospital indemnity insurance can pay cash benefits to help you manage medical expenses that aren’t covered by your primary insurance plan, along with non-medical costs from being unable to work. Having both health insurance and hospital indemnity insurance can give you peace of mind knowing you have extra financial protection in case of the unexpected.

Sources:

1 Healthcare.gov – Health benefits and coverage. https://www.healthcare.gov/coverage/what-marketplace-plans-cover/. Accessed May 6, 2025.

2 Centers for Medicare and Medicaid Services – Know your rights when using health insurance. https://www.cms.gov/medical-bill-rights/know-your-rights/using-insurance. Accessed May 6, 2025.

Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.

Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.

Aflac life plans – A68000 series: Term Life Policies: In Arkansas, Idaho, Oklahoma, Oregon, Texas, Pennsylvania & Virginia, Policies: ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68200, A68300 & A68400. In New York, Policies NY68200, NY68300 and NY68400. Whole Life Policies: In Arkansas, Idaho, Oklahoma, Oregon, Texas, Pennsylvania & Virginia, Policies: ICC1368100. In Delaware, Policy A68100. In New York, Policy NYR68100. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Not available in Delaware. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.

Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY, VA or VT. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.

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