Empowering Medicare Advantage enrollees with hospital indemnity plans

A hospital indemnity plan sometimes gets lost in the noise of all the options you’re encouraged to offer to clients. However, pairing Medicare Advantage with a HIP can help ensure you’re offering comprehensive and secure coverage solutions.

MA and HIP: A powerful combination

The increasing prevalence of MA plans, now covering nearly half of all inpatient hospital stays, demonstrates the powerful appeal of HIPs, as they offer unique benefits that provide clients with financial peace of mind. HIPs are designed to fill potential coverage gaps by covering the out-of-pocket costs associated with hospital stays under MA plans. This makes a HIP a powerful tool in your portfolio.

Unpacking the cash benefits of a HIP

At their core, HIPs provide cash benefits directly to the insured, offering remarkable flexibility during challenging times.

• Flexible spending: The direct cash payment can cover a wide range of expenses, including hospital copays, deductibles and other medical bills. It even covers nonmedical costs, such as transportation, lodging for specialized treatment away from home (which is crucial for rural clients), groceries or home utilities during a hospital stay.
• Beyond hospitalization: HIPs can be a game-changer for older Americans on fixed incomes. A HIP can ensure prompt care without immediate financial worry. It often includes lump-sum cash benefits for urgent care visits, ambulance transport and emergency room services.
• Post-hospitalization support: Some HIPs offer optional riders for vital services after a hospital stay, such as outpatient physical, speech or occupational therapy, and skilled nursing care. This provides a robust safety net addressing the full continuum of care.
• Covering observation status: Observation status is typically considered outpatient care, which Medicare Part A may not fully cover, leading to significant out-of-pocket expenses. However, HIPs offer coverage for observation status care, which can alleviate substantial financial burdens for these clients. This is a critical yet often overlooked feature of HIPs.

Focus on the value of a HIP

1. Educate clients thoughtfully: Many clients may not be aware of the potential out-of-pocket costs associated with MA plans or may assume MA’s coverage is comprehensive. With the understanding that administrative complexities and potential delays in care are often associated with MA plans, position HIPs as a straightforward add-on that provides peace of mind and financial security. When working with clients, focus on the tangible benefits and mechanics of HIPs.
2. Highlight flexibility and freedom: HIPs offer a level of financial flexibility that traditional insurance policies can’t match. Since the payment goes directly to the insured, they can use the funds to cover a variety of costs, not only medical bills. This can include everyday expenses like groceries, utilities or even childcare during a hospital stay.
3. Focus on protection and peace of mind: HIPs are a crucial layer of financial protection, safeguarding consumers against unforeseen expenses arising from hospital stays and various health care needs that can help alleviate financial burdens and provide peace of mind.
4. Showcase the real-life impact of a hospital stay: Hospital stays, even with Medicare Advantage or a high-deductible health plan, can result in significant out-of-pocket costs. Copays and deductibles often total thousands of dollars. Without a HIP, these unexpected expenses can be financially devastating.

Imagine Andrew, who faced a $5,000 deductible after a five-day hospital stay. Fortunately, Andrew also had a hospital indemnity plan that provided a daily benefit. This resulted in a lump-sum payment covering his entire deductible and providing extra funds for other expenses.

A HIP delivers a cash benefit directly to your clients, bridging financial gaps and allowing them to focus on recovery without the added stress of large medical bills. This direct payment makes a tangible difference in their ability to manage finances.

Protect your MA clients 

Although MA plans offer valuable coverage, they have limitations. The potential for high out-of-pocket costs, particularly during a hospital stay, can leave your clients vulnerable to financial hardship.

Combining MA plans with a HIP is a smart strategy to ensure your clients have the necessary protection, regardless of the circumstances.

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Steve Patton is the senior vice president, simplified solutions, life and health brokerage distribution at AmeriLife. Contact him at steve.patton@innfeedback.com.