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Hospital Indemnity Insurance

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How Does Hospital Indemnity Insurance Work?

Hospital indemnity insurance is a supplemental insurance plan designed to pay for the costs of a hospital admission that may not be covered by other insurance. The plan covers employees who are admitted to a hospital or ICU for a covered sickness or injury. And it’s available for companies with as few as two employees.

A welcome financial safety net

Hospital indemnity insurance can be particularly helpful since a majority of Americans don’t have enough savings to cover unplanned medical bills.1 The plan pays cash directly to employees even if they don’t incur any out-of-pocket expenses. The payments can be used for any purpose, including:

  • Medical copays
  • Deductibles
  • Regular expenses, such as food, rent, and utilities

Here’s an illustration of how Guardian Hospital Indemnity Insurance works

Carol goes to the ER for severe abdominal pain and nausea. She has a CT scan that reveals she has gallstones. She is admitted and has emergency surgery to remove her gallbladder. She stays for one night and is released the next day. 

While Carol has medical insurance, she still needs to pay $3,815 of out-of-pocket expenses due to her deductible ($1,500), coinsurance, and other expenses not covered by her plan. Since she has Guardian Hospital Indemnity insurance, her out-of-pocket cost is reduced by 85% to $565.* 

Hospital indemnity plan out of pocket cost example

*For illustrative purposes only. Covered benefits and benefit amounts may vary by employer-sponsored plan. See your plan for specific coverage amounts and details. 

Easy, hassle-free enrollment

Guardian Hospital Indemnity Insurance is guaranteed issue, no health questions asked if an employee elects coverage during the annual open enrollment period. 

Maximum flexibility for you and your employees

Guardian Hospital Indemnity Insurance can be tailored to complement any current medical or supplemental coverage an employee may have — whether it is from Guardian or not. And customizable plan designs [link to features page] enable you to offer coverage that best meets your employees’ needs.

Guardian Hospital Indemnity Insurance is also designed to meet your budget. You can provide coverage as a voluntary benefit — at no cost to your company — or you can pay for all or a portion of the cost.


  • How much hospital indemnity insurance do employees need? 
    That depends on a number of factors: age, income, living expenses, and savings.  
  • Are any medical exams required for hospital indemnity insurance?
    No. Employees don’t have to take a physical or answer medical questions.  
  • Are hospital indemnity insurance payments taxable?
    If Hospital Indemnity premiums are paid on a post-tax basis, benefits are not taxable.  If Hospital Indemnity insurance premiums are paid on a pre-tax basis and used for medical expenses, the benefit may be tax free.  However, any benefit in excess of actual medical expenses incurred, may be considered taxable.  For a definition of medical expenses please see Internal Revenue Service Publication 502 and contact your tax or legal advisor regarding the tax treatment of your policy benefits.  
  • Can employees receive benefits even if the service is covered by other insurance?
    Yes, and is a key advantage of hospital indemnity insurance.  
  • Can employees take the coverage with them when they leave the company?
    Yes, as long as the premiums are paid.


Learn more about how Guardian Hospital Indemnity Insurance can provide you and your employees with financial reassurance. We’re ready to work with you and your broker to determine the best coverage for your company’s needs.


Why Offer Guardian Hospital Indemnity Insurance?
How Hospital Indemnity Works
Hospital Indemnity Features and Advantages

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