Why Agents Should be Selling Hospital Indemnity

Ask any successful Medicare Advantage producer what they are most likely to cross sell with every Medicare Advantage plan sold and you’ll likely hear the same response… Hospital Indemnity.
 While Medicare is important to have, it may still leave gaps in coverage that a policyholder is responsible for.

For instance, most Medicare Advantage Plans don't cover the first 4 to 7 days of a hospitalization. Per the American Hospital Association (AHA) Hospital Statistics, the average hospital stay costs over $10,000, but can vary widely. A Hospital Indemnity plan can help bridge the gaps left open from a Medicare Advantage Plan, by providing a direct cash benefit to the policyholder.

What are the Benefits of a Hospital Indemnity Plan?

• Hospital Confinement Co-Payment Coverage - Up to 31 Days
• Ambulance Transportation
• Emergency Room Coverage
• Laboratory & Radiology Benefits
• Skilled Nursing Facility Benefits
• Primary Care Doctor Office Visits (No Prior Hospital Stay Required)
• Annual Wellness Benefits
• Preventative Care Benefits

Another gap that some Hospital Indemnity plans may help with are hospital visits that are designated as "observation status". Observation status encompasses care received in a hospital without being admitted.

Here's an example:

If you go to the hospital complaining of abdominal pain, you may be placed in a hospital room or bed. This allows the doctor to monitor your condition while performing diagnostic tests to determine the cause of your pain without formally admitting you.

Observation status is mainly a billing designation, but it matters since services received while under observation are not covered by Medicare Part A.

Medicare Part B will cover 20 percent of the Medicare-approved amount for any services received. If the beneficiary does not have Part B, then they are responsible for 100% of the costs incurred while under observation.

For most people, the out of pocket costs of having these gaps in coverage can be devastating. The right hospital indemnity plan could help ease that burden and make for a very affordable alternative to help your clients cover the unexpected.

When Can You Sell a Hospital Indemnity Plan?

The Centers of Medicare and Medicaid Services (CMS) have said that a Hospital Indemnity Plan can be marketed and sold during a Medicare Advantage appointment as long as it was agreed on the Scope of Appointment form.

You can also go back to your current clients with Medicare Advantage and do a basic Needs Analysis to see how the Hospital Indemnity Plan will benefit them and limit their out of pocket costs.

Relative Cost of a Hospital Indemnity Plan

Of the 20,400,000 people currently enrolled in a Medicare Advantage Program 46% are on a zero-premium plan.

Indemnity medical insurance costs depend on your age, the amount of coverage you want and the indemnity insurance company. You can buy coverage per individual or per family. For the benefit that a hospital indemnity insurance plan provides, the cost is relatively inexpensive.

When you sell a $0 or low cost Medicare Advantage Plan, this allows budget flexibility with a majority of consumers to cover the gaps left behind. With a lower premium Medicare Advantage plan, your clients can entertain a Hospital Indemnity plan without breaking the bank and have peace of mind and a sense of security.

PSM offers several Hospital Indemnity options for your portfolio.

If you have any questions, please give one of our experienced marketers a call at 1-800-998-7715 for more information on this versatile product for your insurance clients.