Hospital confinement insurance can bridge gaps of traditional health coverage 

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Justin Stoltzfus

Even if you have health insurance, your policy might have gaps and out-of-pocket costs that you might not be aware of until you land in the hospital. Hospital confinement insurance provides cash for each day you spend in a hospital. It can be used for deductibles and other unexpected expenses that your health insurance won't foot the bill for, according to Aflac, which offers this type of insurance.

A hospital confinement policy is a kind of specialized medical insurance that operates like some of the "riders" on a traditional plan. Rather than providing broader coverage, a hospital confinement plan focuses on covering costs associated with hospitalization. Hospital confinement insurance can be one way to guard against catastrophic medical expenses without paying sky-high premiums for more traditional health insurance.

How does hospital confinement insurance work? Basically, recipients get cash payouts that can be used depending on their needs. Most plans have no deductible, and the cash can be used to pay for items that aren't covered by a major medical plan. For example, according to State Farm, supplemental hospital insurance can help cover expenses like:

  • Deductibles, co-pays and co-insurance.
  • Private room and staff fees.

A hospital confinement plan can pick up where a major medical policy leaves off, paying for potentially large costs that come with the territory of regular insurance. For example, a 20 percent co-insurance responsibility (the amount you must pay after meeting your deductible) for traditional health insurance can add up to thousands of dollars. Any excluded coverage for a night's hospital stay can range into the thousands, with extra facility costs getting billed straight to the patient.

One advantage of hospital confinement insurance is that the money comes in right away, when it's needed to pay the bills.

Hospital confinement insurance can be purchased in a variety of rate structures, according to National Security Group, and plans can be customized to cover several family members. Daily reimbursement depends on how many units of coverage the recipient buys and the reason for the hospital stay. For example, one unit of coverage from the National Security Group pays $50 a day for an illness or accident, $75 a day for cancer or a heart attack and $100 a day if both spouses are hospitalized at the same time.

Unlike most major medical plans, hospital confinement coverage can move with workers when they switch employers. Aflac points out that this kind of flexibility comes in handy if a family member loses his or her job along with health insurance.

Hospital confinement insurance is different from long-term care insurance, which covers longer stays in skilled nursing facilities. While hospital confinement policies tend to cover short-term, crisis-related stays, long-term care policies cover longer confinements related to disability or aging. Other limitations can include no coverage for pre-existing conditions for the first year of coverage and limited coverage for patients 65 and older, according to National Security Group.