Differences Between Hospital Indemnity and Gap Coverage

Not all hospital visits are unexpected, but most can bring unwelcome expenses. Major medical insurance may help with some costs, but having hospital stay-related coverage can be helpful, too. So how do you know which type of plan is best for your employees?

Let’s break down two of the most common kinds of coverage: hospital indemnity and gap plans.

Hospital Indemnity Insurance

Unlike other supplemental health insurance, hospital indemnity plans are not designed to provide benefit amounts to reimburse specific treatments received. Rather, hospital indemnity insurance is designed to pay a flat rate per day of a qualified hospital stay. There are specific plan criteria that need to be met to receive the set benefit amount.

Hospital GAP PLAN^® Insurance

The defining characteristic of Hospital GAP PLAN^® Insurance is in its name: it is designed to bridge the gap between your deductible and your hospital bill amount. Gap coverage is based on what the insured's copay, coinsurance, or deductible responsibilities are after their insurance has paid.

The simplest way to contrast gap insurance against indemnity insurance is indemnity insurance provides a flat rate benefit based on the time spent confined in a hospital, while gap insurance pays an amount based on an out-of-pocket expense.

Which is right for your employees?

Both kinds of coverage offer employees ways to cover out of pocket expenses, but determining which is the best addition to your benefits package relies on multiple factors. Our account managers can help you create a customized benefits strategy that works for your employees and your bottom line.

This blog is up to date as of December 2018 and has not been updated for changes in the law, administration or current events.