Although there is no longer an individual mandate to have health insurance, several states still have laws requiring employers to offer health insurance or individuals to have insurance.1 Health insurance can be important for self-employed individuals, as it helps reduce the burden of high healthcare costs. For instance, a three-day hospital stay costs an average of $30,000.2 And for expenses that your primary insurance doesn’t cover, a hospital indemnity insurance policy can help bridge coverage gaps. Read on to learn what health insurance helps with and the advantages of supplementing this plan with hospital indemnity insurance.

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What does health insurance help with?

While many people get health insurance through their employer, self-employed individuals often don’t have that option. But whether you’re a solopreneur or running a small business, there is always a possibility of getting sick or injured. Health insurance may reduce your out-of-pocket costs, but hospital costs can add up quickly. Marketplace health insurance typically covers essential health benefits, including ambulatory services, emergency services, pregnancy, and chronic disease management.3 

Having a health insurance plan can help reduce your out-of-pocket costs, making it worth the monthly premium for most self-employed individuals. The federal government’s Healthcare.gov Marketplace offers a range of plans from insurance providers so you can choose a plan with features that suit your needs.

What is hospital indemnity insurance?

While a health insurance plan can save you money when you go to the doctor, or visit the hospital, there may still be coverage gaps, even  after making necessary copayments and deductible payments. As mentioned, the average hospital stay costs $30,000 and may include expenses that are not covered by health insurance. Hospital indemnity insurance is a supplemental insurance policy that can help fill these gaps by paying the policyholder a cash benefit directly, unless otherwise assigned. You can use your benefits to help with any expenses like childcare, groceries, and rent. 

Usually, a hospital indemnity insurance plan pays the policyholder directly or another assigned beneficiary you appoint. That way, you’ll have additional financial flexibility if needed.

How does hospital indemnity insurance work?

Hospital indemnity insurance works similar to a private health insurance plan. You pay premiums to an insurance provider to keep your coverage active. As a self-employed person, you can opt to pay these premiums out of pocket or pay through paycheck deductions with an employer-sponsored plan.

Each plan may function differently, and have different benefits, but usually, you can file a claim for care provided in the hospital. Then, your insurance pays eligible claims based on the policy. You can use the benefit to help pay for treatment or procedures that are not covered by your health insurance plan or general living expenses. The particulars of each plan will vary between insurers and states. Some plans also offer features like:

  • Family coverage options for you, your partner, and your children
  • Portability between states if you move or start a new job
  • Fast processing of eligible claims 

Advantages of hospital insurance for the self-employed

Hospital indemnity insurance is not a replacement for health insurance, but this supplemental plan can help you save money on hospital out-of-pocket expenses. Some key advantages to supplemental hospital indemnity may include:  

  • Coverage options for yourself and family members
  • Eligible hospital indemnity insurance claims being paid directly to the policyholder, unless assigned otherwise 
  • Added peace of mind that you’ll have help filling coverage gaps so you can focus on your recovery

The bottom line

When you’re self-employed, you may not have the same health insurance coverage as you would with an employer-sponsored plan. This can make supplemental insurance an ideal option for bridging coverage gaps. A hospital indemnity insurance policy can help you with the costs of an extended hospital stay, along with other expenses.

By combining traditional health insurance with hospital indemnity coverage, self-employed individuals can help create added financial security in case of a hospitalization — allowing you to focus on what you do best.

Sources:

1 Equifax – What Do Individual Healthcare Mandates Look Like in Your State? Updated October 1, 2024. https://workforce.equifax.com/all-blogs/-/post/what-do-individual-healthcare-mandates-look-like-in-your-state. Accessed May 12, 2025.

2 Healthcare.gov – Why health insurance is important. https://www.healthcare.gov/why-coverage-is-important/protection-from-high-medical-costs/. Accessed May 12, 2025.

3 Healthcare.gov – Health benefits & coverage. https://www.healthcare.gov/coverage/what-marketplace-plans-cover/. Accessed May 12, 2025.

Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.

Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.

Hospital, B40000 series: In Delaware, Policies B40100DE & B4010HDE. In Idaho, Policies B40100ID & B4010HID. In Oklahoma, Policies B40100OK & B4010HOK. In Pennsylvania, Policies B40100PA & B4010HPA. In Virginia, Policies B40100VA & B4010HVA. 

Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY, VA or VT. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations, and exclusions.

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