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Glossary

Hospital indemnity insurance: how it works, and how it compares with hospital cash in Singapore

Hospital indemnity insurance is a US supplemental health policy that pays a fixed dollar amount when the insured person is admitted to hospital, per stay, per day or both, whatever the hospital bill comes to.

How it works

It pays a set sum whatever the bill. NAIC describes hospital confinement indemnity cover as a fixed amount for each day in hospital, and North Carolina's insurance department adds that the amounts aren't based on actual expenses.

NAIC's model regulation for supplementary health insurance, which each state adapts into its own rules, sets out the shape:

  • The trigger is a hospital stay, and some plans pay on other health events too.
  • The benefit can be a lump sum for each admission, a daily amount, or both.
  • It's paid whatever other cover pays.
  • The money goes to the policyholder, who decides what it's for.
  • A pre-existing condition can't be excluded for more than 12 months from the start of cover, unless the policy names it.

It's a supplement to health insurance. The model's required disclosure says the policy isn't major medical insurance and doesn't replace it, and Michigan's regulator describes these plans as an addition to comprehensive cover.

The daily amount, the days paid and any other triggers are the insurer's, and each state sets its own rules.

Singapore's nearest term is hospital cash. It works the same way, paying the person a set amount a day, and it sits beside MediShield Life or an Integrated Shield Plan as a US plan sits beside major medical cover.

Worked example, with made-up figures: a client's US plan pays US$500 on admission and US$200 a day, for up to 10 days a stay. She's in hospital for 3 days and the bill is US$18,000. The plan pays her US$1,100, whatever her major medical plan pays toward the bill.

Where it shows up in your week

It comes up when a client with US cover asks how it lines up with what they hold here. The CRM keeps what they asked and your reply on their page.

Questions advisors ask

Sources

The benefit and the bill are separate.

Make sure the client knows which one they hold.

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