Medicare agents who want to secure a year-round income know the importance of cross-selling. Including hospital indemnity plans in your portfolio will help boost your income while also protecting your clients from the financial impact of high hospital bills.
What Is Hospital Indemnity Insurance?
Hospital indemnity insurance is a supplemental insurance policy that a policyholder takes out in addition to regular health insurance to help cover out-of-pocket medical costs related to a hospital stay. Hospital stays are expensive, and Medicare does not cover everything. The costs may add up quickly.
Original Medicare
If admitted to the hospital in 2025, Medicare Part A beneficiaries will pay a $1,676 deductible that covers the first 60 days of a benefit period. If they are readmitted, a new benefit period starts, meaning they must pay the deductible again. Days 61 to 90 are $419 per day. After day 90, the cost is $838 per lifetime reserve day (up to a maximum of 60 days over the course of the beneficiary’s lifetime). After the beneficiary reaches this limit, they pay all costs.
Medicare Advantage
MA plan enrollees pay a daily inpatient hospital copay for a set number of days, for example, days one to six of a hospital stay. Copays may quickly reach the plan’s out-of-pocket maximum ($8,850 is the maximum amount allowed in 2025).
What Does a Hospital Indemnity Plan Cover?
Policies vary, but most plans cover hospitalization, intensive care, and critical care. Some policies cover outpatient surgery, ambulance services, ER visits if not admitted to the hospital, and hospital visits designated as “observation status.” Some insurers offer riders that include inpatient mental health, transportation, outpatient therapy, chiropractic services, urgent care visits, and skilled nursing.
A hospital indemnity plan may help pay for:
- Deductibles and copays
- Extended hospital stays beyond what Medicare will cover
- Non-covered services or testing, including services provided by out-of-network providers
- At-home recovery and medical equipment
How Do the Policies Work?
Hospital indemnity plans pay a fixed daily amount for the days the policyholder is in the hospital. The dollar amount varies (as does the number of covered days) depending on the policy. An insurer may also provide different daily benefits for intensive care, outpatient surgeries, and cancer treatments.
Monthly policy premiums are based on several factors, including age, location, insurer, and the number of covered days and daily coverage amount.
When the policyholder makes a qualifying claim, the insurer pays the policyholder directly. The policyholder can use these funds for anything – from medical expenses to groceries, rent, and utilities.
Who Should Consider a Hospital Indemnity Plan?
Hospital indemnity plans may benefit individuals of any age, but they are especially beneficial for seniors on fixed incomes who are at risk of burdensome medical debt from frequent or unexpected hospitalizations. Medical debt is one of the leading causes of bankruptcy for seniors and may result in lower credit scores, denial of care due to unpaid bills, or even the need to cut back on expenses and other necessities.
Seniors with chronic health issues, those with upcoming surgeries, or those who would struggle to pay a large unexpected medical bill are good candidates for a hospital indemnity plan.
Read the Fine Print
Indemnity plans vary greatly. It’s essential to have a thorough understanding of the insurers and plans in your portfolio. To find out if an indemnity plan is right for a particular client, be sure to read the fine print.
Limitations will vary by plan:
- Hospital daily benefits, which is a set dollar amount paid per day
- Hospital benefit limit for the total number of days
- Intensive care unit benefits, which could be different
- Two separate hospitalizations per year (the insurer may consider it the same hospitalization if the policyholder is back in the hospital within a month of discharge)
- Benefit reductions at a certain age, such as 70
Also, check if there is a waiting period. For example, how long after a hospitalization can a policyholder submit a claim, and when will the policyholder receive the payment?
The Right Products for the Right Clients
A hospital indemnity plan is not for everyone. A thorough needs assessment will help you identify who would benefit from one of these supplemental plans. By customizing a plan that fits their medical needs and budget, you can help provide financial security and peace of mind for clients who need this most.
The dedicated team at Western Asset Protection is here to support your business growth. Feel free to contact us with any questions about hospital indemnity plans or other ancillary products. Reach out today.