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Becoming a parent can be one of life's most cherished events – but it can also come with expenses. In addition to diapers, clothes, strollers, and all the items a newborn needs, there are other costs. While medical insurance helps with medical expenses, hospital indemnity coverage pays a fixed benefit based on admission and days hospitalized, which can be used to help with any additional costs. This article answers a few key questions to help you decide if signing up for hospital indemnity insurance at work is worth it for you:

  • What is hospital indemnity insurance?

  • How can it help with medical costs during pregnancy and childbirth?

  • How do people get it?

What is hospital indemnity insurance, and how does it work?

It's insurance you can buy to supplement – but not replace – your primary medical insurance. It’s a type of supplemental insurance that complements your primary medical insurance during periods of hospitalization. Many employers offer this and other types of supplemental health insurance to help support their employees’ financial well-being.1

Other kinds of supplemental health insurance – including cancer, critical illness, and accident – typically pay benefits based on a specific covered illness or injury. A hospital indemnity plan works differently: it pays a fixed benefit for admission and days hospitalized and can be used to help at any cost. That can be especially helpful because hospitalization tends to be a disruptive event in people's lives, and costs for extra childcare, petcare, transportation, and help around the house can really add up. Expenses like these can impact family finances beyond any out-of-pocket medical costs you may have. A hospital indemnity plan can help with all those things. Premiums can be cost-effective – and claims tend to be straightforward, with benefits paid out quickly.

How a hospital indemnity plan helps cover childbirth costs

The majority of Americans may not have enough savings to cover unplanned medical bills.2 Hospital indemnity insurance is designed to help provide financial support for periods of hospitalization by paying benefits that can be used to cover unexpected costs that can occur with pregnancy and childbirth. Plans differ but may pay benefits for a number of childbirth-related items, such as:3

  • The mother’s hospital/ICU admission

  • Typically, up to 15 days of hospital confinement, for example, to care for a baby in a neonatal intensive care unit

  • Complications of pregnancy (to the same extent as other covered sicknesses) Even a birth without complications can leave you with significant medical bills. The average out-of-pocket cost for a natural birth is $2,655. The costs associated with a cesarean birth are even higher, averaging $3,214.4 Hospital indemnity coverage can help alleviate some of that financial strain, with benefits paid directly to you based on admission and days hospitalized. And, it helps give you the freedom to spend the money you receive to help cover any out-of-pocket costs, providing important financial support during your hospital stay in addition to your medical coverage. With stronger financial stability, you can focus your attention on more pressing matters, like enjoying your newborn.

How to get coverage

Some plans may have a waiting period before they pay benefits for birth-related hospitalizations, so the best time to consider purchasing this supplemental insurance coverage is before you become pregnant. That will help ensure that you and the baby are covered from the start for any issues.

When available, the best option for most people is to consider purchasing a plan through their employer. Since it's a guaranteed issue, you won't have to answer medical questions or be subjected to a medical exam. Workplace plans may also feature cost-effective group rates: premiums may be a fraction of the cost of regular medical coverage and can be conveniently deducted from your paycheck. Another perk is that these plans are typically portable, meaning you can take your coverage with you if you leave your job.

Frequently asked questions about supplemental health insurance coverage

Supplemental health insurance coverage may be worth buying, particularly if you plan on starting or growing your family and if offered through your employer. Childbirth may be an expensive endeavor and even more costly for those who have high-risk pregnancies, a multiple pregnancy, or have complications during delivery. Hospital indemnity insurance can provide financial support during periods of hospitalization by paying a fixed benefit that can be used to help with out-of-pocket costs. It can also give you financial stability for unexpected expenses brought on by a hospital stay, from transportation to extra costs for childcare and more. Plus, benefits are paid directly to you.

Hospital indemnity plans pay benefits based on admission and days hospitalized, even during pregnancy and childbirth. Some hospital indemnity insurance policies may consider pregnancy a pre-existing condition with waiting periods. So even though a workplace plan offers guaranteed issue coverage, if there’s a pre-existing condition clause for pregnancy you may not receive benefits if you sign up while already pregnant. Ask your HR representative if you have questions about your employer’s plan.

If you plan on starting a family – either now or at some point in the future – then it may well be worthwhile. Out-of-pocket costs, even for uncomplicated deliveries, are typically several thousand dollars. A hospital indemnity plan pays a fixed benefit directly to you that can be used to help cover those costs and other non-medical expenses related to your hospital stay, such as travel to and from the facility or child care.

  1. The items listed are examples of things generally covered, but specific procedures and admissions covered will vary by employer and plan. Be sure to read through your plan thoroughly before purchasing. Guardian plan benefits are not payable for a birth happening within the first 9 months of coverage.

  2. Hospital Indemnity is a limited plan of supplemental health insurance that provides financial support as a lump sum or indemnity benefit following a covered hospitalization. This is not hospital or medical expense insurance, a health maintenance organization (HMO) contract, major medical expense insurance, or minimum essential coverage defined by federal law. This coverage does not reimburse you for medical expenses, the lump sum payment may be a per diem rate and can be used for any purpose.

  3. https://www.retireguide.com/retirement-planning/risks/medical-bankruptcy-statistics/ Accessed 01/2024

  4. https://www.healthsystemtracker.org/brief/health-costs-associated-with-pregnancy-childbirth-and-postpartum-care/ Accessed 01/2024

  5. Bankrate.com, January 6, 2016. http://www.bankrate.com/banking/savings/survey-how-americans-contend-with-unexpected-expenses/

Links to external sites are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents, and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services and make no representation as to the completeness, suitability, or quality thereof.

Guardian Hospital Indemnity Insurance is underwritten by The Guardian Life Insurance Company of America, New York, NY and will not be effective until approved by a Guardian underwriter. Products are not available in all states. Policy limitations and exclusions apply. Optional riders and/or features may incur additional costs. Plan documents are the final arbiter of coverage. This policy provides limited hospital insurance only. It does not provide basic medical or major medical insurance as defined by the New York State Department of Financial Services. Policy Form # GP-1-HI-15.