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As a licensed insurance agent, the goal is to help clients get the best coverage for their healthcare needs. In doing this, they are protected against financial loss. One product that can provide significant value to clients is hospital indemnity insurance. This coverage is an excellent addition to many health plans, particularly for individuals on Medicare Advantage plans or high-deductible health plans. In the post below, we answer the question; why offer hosptial indemnity insurance.

Hospital Indemnity Insurance

Hospital indemnity insurance is supplemental insurance that provides cash benefits to policyholders when they are hospitalized due to an illness or injury. Unlike traditional health insurance, which pays service providers, hospital indemnity insurance provides a lump sum or dialy benefit amount to the policyholder. Policyholders can decide how they use the money.

Benefits for clients

1. Fills coverage gaps: Many health insurance plans, including Medicare Advantage, have copays, deductibles, and out-of-pocket expenses that can add up quickly. Hospital indemnity insurance helps cover these costs, reducing financial strain.
2. Flexibility in use: Beneficiaries can use the cash benefits from a hospital indemnity policy any way they like. They can pay medical bills, household expenses, or travel costs associated with treatment.
3. Affordable premiums: Compared to major medical insurance, hospital indemnity plans are relatively affordable, making them accessible to many clients.
4. No network restrictions: Policyholders receive payment for a stay in any hospital, without worrying about network limitations.
5. Customizable plans: Many hospital indemnity policies let clients choose coverage amounts and additional riders. This can include; skilled nursing facility coverage or outpatient services.

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Why agents should offer hospital indemnity insurance

1. Enhanced client protection: Offering hospital indemnity insurance demonstrates that you are proactive in helping clients manage potential healthcare costs that may not be covered by their primary insurance.
2. Increase client retention: When clients see the value in additional coverage, they are more likely to trust and stay with an agent who prioritizes their financial well-being. It is also helps build good client relations when all their coverage is provided by one agent.
3. Expand sales opportunities: Adding hospital indemnity insurance to your portfolio increases cross-selling opportunities, allowing you to provide more comprehensive solutions while expanding your revenue.
4. Stand out amoung competitors: Many agents focus solely on traditional health plans. Offering supplemental policies sets you apart and positions you as a more knowledgeable, full-service advisor.
5. Help seniors with Medicare Advantage Plans: Many Medicare Advantage plans have large hospital copay amounts. A hospital indemnity plan tailored to these costs provides clients with peace of mind.

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How to introduce Hospital Indemnity Insurance to clients

Educate clients on coverage gaps: Explain how their existing health plan leaves them with a large out-of- pocket payment in the event of a hospital stay.

Provide real-life scenarios: If possible, use examples of how hospital indemnity insurance has helped individuals manage medical expenses.

Offer a needs-based approach: Assess each client’s unique situation and recommend hospital indemnity insurance as part of a holistic healthcare strategy.

Explain affordability: Break down the cost versus benefit so clients see the value of a small monthly premium compared to potential hospital expenses.

Some tips to maintain your book of business

Hospital indemnity insurance is a great way to protect clients against unexpected healthcare costs. As an agent, offering this coverage not only enhances your client’s financial security but also strengthens your reputation as a trusted advisor. Adding hospital indemnity insurance to your product offerings helps you provide a more complete approach to healthcare planning while expanding your business opportunities.

Inpatient vs Outpatient

It can be tricky to determine, at times, what is covered by Original Medicare and what is not. For instance, although Original Medicare has hospital insurance (Part A) and medical insurance (Part B), whether or not those insurances will cover hospital stays and procedures depends in large part on whether or not the patient is inpatient or outpatient. Beneficiary’s hospital status determines how much services cost in hospital, as well. To help clear things up, here are three real-life examples of what is covered and when:

Susan goes to the ER with chest pain. She is then formally admitted to the hospital under a doctor’s orders.

Inpatient vs Outpatient?

In this case, Susan is an outpatient until she is formally admitted under the doctor’s orders, after which she is inpatient. Her Part A insurance would pay for her inpatient hospital stay and all related outpatient services provided in the three days before she was admitted. Part B of Medicare would pay for her doctor services.

Jose goes to the ER with abdominal pain. The hospital keeps him overnight in observation, and then a doctor writes an order for admission on the second day.

Jose would be inpatient after the doctor writes the order for admission on the second day, and his Part A hospital insurance would cover accordingly, including the outpatient services in the three days before admission (the overnight observation). Additionally, his medical insurance (Part B) would cover his doctor services.

Laura is in the hospital for an outpatient surgery, but then is kept overnight due to high blood pressure. The doctor does not write an order to admit her, and she is released the next day.

In this case, Laura is never an inpatient, and her hospital insurance would cover none of those services she used while on overnight observation. However, her Part B insurance would cover her doctor services and all relevant outpatient services she received at the hospital.

These examples provide some real-life stories to help clarify what is covered by which part of Medicare and when, so you can best help your clients understand their benefits.

Licensed Medicare Agents

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