Selling Hospital Indemnity Insurance to Medicare Clients
Now that the Annual Enrollment Period (AEP) is behind us, have you been speaking with clients about supplemental health insurance? Selling hospital indemnity insurance is a strategic way to reconnect with existing clients while providing them with valuable insurance coverage that helps manage hospital expenses. These plans can be sold year-round, allowing you to boost revenue outside of Medicare’s traditional enrollment periods.
Additionally, if you properly disclose it in the Scope of Appointment (SOA) form, you can discuss hospital indemnity insurance during a Medicare Advantage meeting, making it an easy add-on for clients looking to minimize out-of-pocket costs.
Why Clients Need Hospital Indemnity Insurance
Seniors and Medicare-eligible clients often live on a fixed income. A single hospital admission, unexpected ICU stay, or emergency room visit can lead to financial strain, especially if their health insurance plan includes high deductibles and copays. Many clients are unaware of just how much a hospital stay can cost—until they receive the bill.
While Original Medicare provides medical coverage, it doesn’t cover all out-of-pocket expenses related to inpatient hospital care. Even Medicare Advantage plans with $0-premium often have high deductibles, out-of-pocket maximums, and exclusions for certain medical expenses. This is where a hospital indemnity insurance policy can help bridge the gap.
What Is Hospital Indemnity Insurance?
What is hospital indemnity insurance? It is a type of medical insurance designed to help clients manage the financial burden of hospital stays. A hospital indemnity insurance plan provides a cash benefit directly to the policyholder after a hospital confinement or hospital admission.
Unlike traditional health insurance, which reimburses providers, hospital indemnity insurance works by paying policyholders directly. These benefit payments can be used for any purpose, including:
- Covering copays, deductibles, and other out-of-pocket hospital costs
- Paying for additional medical bills, such as prescriptions or follow-up care
- Offsetting lost income for those still working
- Managing non-medical expenses like childcare, transportation, and hospital parking
How Much Does a Hospital Stay Cost?
The cost of a hospital stay varies significantly based on location and type of facility. In New York, for example, the average daily hospital confinement cost is between $1,500 and $3,000. The average Medicare-eligible patient stays in the hospital for 5.5 days, meaning their total hospital bills could exceed $15,000 before factoring in additional services, procedures, and prescriptions.
A hospital indemnity insurance policy can provide a lump sum or per-day cash benefit for every night a client spends in the hospital. For instance, if a hospital indemnity insurance plan offers $250 per day for up to 6 days, that’s $1,500 in benefit payments—helping offset the burden of out-of-pocket expenses.
How Hospital Indemnity Insurance Works
Hospital indemnity insurance works by providing benefit payments based on a predetermined policy form. Clients must submit a claim after their hospital admission, at which point they receive a lump sum or per-day payout.
Depending on the plan, hospital indemnity coverage can also extend to:
- Emergency room visits
- Outpatient procedures and intensive care stays
- Ambulance transportation
- Laboratory and radiology tests
- Skilled nursing facilities
- Preventive care and wellness benefits
Since these policies provide a cash benefit, the funds can be used for hospital bills, lost wages, or any other medical expenses the client deems necessary.
Selling Hospital Indemnity Insurance to Medicare Clients
Spring is the perfect time to start selling hospital indemnity insurance as part of your insurance products portfolio. Here are a few strategies to integrate it into your business:
- Revisit your existing Medicare clients – Schedule follow-up meetings to check on their insurance coverage and identify gaps in their health insurance plan.
- Educate clients on hospital costs – Many clients assume Original Medicare or their Medicare Advantage plan covers all hospital expenses. Help them understand potential out-of-pocket costs and deductibles.
- Highlight flexible use of benefits – Emphasize that clients receive direct benefit payments that they can use however they choose.
- Position it as a necessary add-on – Just as clients purchase life insurance for financial protection, hospital indemnity insurance serves as a safety net for unexpected hospital stays.
By incorporating hospital indemnity insurance into your sales strategy, you can provide clients with valuable financial protection while increasing your insurance company’s revenue stream.
