With today’s Medicare Advantage plans often leaving beneficiaries vulnerable to high hospital costs, hospital indemnity insurance can be a crucial safety net, providing clients with the financial support they need for a smoother recovery.
Hospital indemnity insurance, an essential ancillary product, covers expenses related to inpatient hospital stays. Here’s why you should consider adding these plans to your portfolio this fall.
The Perfect Cross-Sell Opportunity
Many Medicare-eligible individuals are drawn to Medicare Advantage (MA) plans for their extra benefits and low or even $0 premiums. However, these plans often come with high copays, deductibles, and out-of-pocket limits that can reach up to $8,850—and will rise to $9,350 in 2025. For seniors needing medical care, these expenses can become a significant burden.
In the U.S., the average hospital stay is around 4.5 days, with the typical inpatient stay cost under an MA plan averaging $14,900. Even with insurance, these payments can be challenging, particularly for clients on a fixed income or those unable to work due to illness or injury.
Even with coverage, affording hospital bills can still be a struggle.
Understanding Hospital Indemnity Insurance
Hospital indemnity insurance provides beneficiaries with a set cash payout after a qualifying event. This fixed benefit can be used to help cover deductibles, ER visits, observation stays, surgeries, medications, transportation, lodging, health screenings, and more. Policyholders can also enhance their coverage with optional riders for expenses related to cancer treatment, ambulance services, or skilled nursing care.
For Medicare sales agents, offering hospital indemnity insurance is an excellent way to add value for clients. Not only can it increase your earnings, but these plans are also available for sale year-round!
A Major Market Opportunity
Let’s consider some key statistics from KFF:
- 51% of Medicare beneficiaries are enrolled in Medicare Advantage (MA) plans.
- 97% of MA enrollees have plans that include prescription drug coverage.
- 73% of Medicare Advantage Prescription Drug (MAPD) beneficiaries pay no premium for their plan.
- MA enrollees face an average out-of-pocket maximum of $4,835 for in-network services and $8,659 for out-of-network services (for PPOs).
Currently, a substantial number of beneficiaries could benefit from hospital indemnity plans. With the Congressional Budget Office projecting MA enrollment to rise to 62% by 2033, the market for these plans is expected to keep growing, presenting an ongoing opportunity to connect with prospective clients who need this coverage.
Is Hospital Indemnity Insurance Right for Your Client?
Hospital indemnity insurance is available to people of any age, though it’s not a one-size-fits-all solution.
The ideal candidate for hospital indemnity insurance is often someone already in your client base, particularly those enrolled in $0-premium Medicare Advantage plans or clients on fixed incomes who may struggle with high out-of-pocket expenses.
Before recommending this coverage, take time to analyze your client’s primary health plan and compare it with hospital indemnity options. Assess if the additional protection outweighs the monthly premium costs, ensuring it’s a valuable addition to their coverage.
Guidelines for Selling Hospital Indemnity Plans
It’s important to remember that hospital indemnity plans can only be discussed during a Medicare sales appointment if your client has selected the hospital indemnity option on their Scope of Appointment (SOA) form. Additionally, keep in mind that CMS has reintroduced the 48-hour rule for SOAs.
□ Stand-Alone Medicare Prescription Drug Plans (Part D)
X Medicare Advantage Plans (Part C) and Cost Plans
X Dental/Vision/Hearing Products
X Hospital Indemnity Products
□ Medicare Supplement (Medigap) Products
So, is it worth offering hospital indemnity insurance alongside Medicare Advantage plans? We believe the answer is a resounding YES. Like a cozy blanket on a cold day, certain MA plans and hospital indemnity plans complement each other well. This added layer of coverage provides clients with extra peace of mind and protection, no matter what challenges lie ahead.
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For more information, please contact our office at 347-971-3399 or send an email to rdashevskyy@essentialcare.info.
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