Hospital indemnity insurance: what a stay pays
Enter the admission benefit, the daily benefit, the days in hospital and the yearly premium. The cash paid for the stay and the share of your deductible it covers appear at once.
Example, not your result yet· change a figure to see yours
Paid for the stay
$1,600
94% of the deductible · 6.7 years of premium
| Admission benefit | $1,000 |
| Daily benefits | $600 |
| Deductible left to pay | $100 |
| Out-of-pocket left at worst | $6,900 |
A fixed payment, whatever the bill. It is not health coverage and does not count toward the deductible.
Compiled by Radif Partners · How the figures are built · IRS rules and BLS plan data read November 7, 2026
Hospital indemnity insurance pays a fixed amount when you are admitted to a hospital, often an admission benefit plus a daily benefit for each day of the stay, regardless of the bill or of what your health plan pays. With a $1,000 admission benefit and $200 a day, a three-day stay pays $1,600, a one-day stay $1,200 and a week $2,400. Against the minimum deductible of a plan that qualifies for a health savings account in 2026, $1,700 for self-only coverage under Revenue Procedure 2025-19, the three-day payment covers 94%; against the $8,500 ceiling on out-of-pocket costs, 19%. At a $240 yearly premium, it equals 6.7 years of premiums. Observation stays, outpatient procedures and emergency visits without admission are often outside the benefit or paid at a lower rate. Bought with after-tax money, the benefits are not taxable (IRS Publication 525).
How the benefit is built
A hospital indemnity policy pays you a fixed sum when you are confined in a hospital as an inpatient. Most policies combine an admission benefit, paid once per stay, with a daily benefit for each day, up to a limit of days per stay or per year. Some add amounts for intensive care, for a newborn's stay or for outpatient surgery. The payment does not depend on the bill, and it is made to you, not to the hospital. Group versions are sold at work as voluntary benefits, paid by payroll deduction; individual versions are sold directly.
The calculator adds the admission benefit and the daily benefits for the days you enter, then compares the total with your health plan's deductible and out-of-pocket maximum, set by default to the 2026 minimum deductible and maximum out-of-pocket of plans that qualify for a health savings account (Revenue Procedure 2025-19). Replace them with your own plan's figures.
Your stay, your payment
Example, not your result yet· change a figure to see yours
Paid for the stay
$1,600
| Admission benefit | $1,000 |
| Daily benefits | $600 |
| Deductible left to pay | $100 |
| Out-of-pocket left at worst | $6,900 |
Short stays decide the value
Because the admission benefit is paid once, short stays pay a large share of the total: $1,200 for one day, $1,600 for three, $2,400 for a week in the example. Many hospital stays are short, and some are not admissions at all. Observation status, used when a hospital keeps you to decide whether to admit you, is billed as outpatient care even when it lasts overnight, and an indemnity policy that pays only for inpatient confinement pays nothing for it. The definition of confinement is the most important line in the contract.
Against your health plan
The comparison with the health plan shows what the payment can do. A deductible of $1,700 is the least a self-only plan can ask and still qualify for a health savings account in 2026; many plans ask more. The out-of-pocket maximum caps your share of covered costs for the year, at $8,500 at most for self-only coverage in those plans. A stay that reaches the maximum costs you that amount, and the indemnity payment reduces the money you have to find. The accident insurance and critical illness calculators use the same plan figures.
Premium against payment
The years of premium figure divides the payment by the yearly premium: 6.7 years for a three-day stay at $240 a year. The same money set aside in a health savings account, up to $4,400 a year for self-only coverage in 2026, is deductible, grows tax-free and pays medical costs tax-free (IRS Publication 969), and it stays yours if you are never admitted. The policy pays more than the account would hold only if a stay comes early.
Tax
Benefits from an accident or health policy whose premiums you paid are not income (IRS Publication 525). If the premium is paid by the employer or deducted pre-tax, fixed payments that are not reimbursements of medical expenses fall under the rule for employer-funded plans and can be taxable. Hospital indemnity does not count as health coverage for health savings account purposes, so it does not affect eligibility to contribute.