High-deductible MedSupp G + hospital indemnity = a win for clients

As health care becomes more complex, our role as insurance professionals has evolved from salespeople to advocates, tasked with helping clients navigate a confusing system to improve their health and financial well-being. We continually seek innovative ways to protect the people we serve.

One of the most effective strategies to emerge in recent years is the combination of a high-deductible Medicare Supplement Plan G with a hospital indemnity policy and/or other ancillary plans. This surprisingly simple yet powerful pairing enables us to help clients reduce their monthly premiums while still providing excellent protection. It's a strategy that has redefined how my team, clients and I approach retirement health care planning, and I want to share the "why" and "how" behind this approach.

As licensed insurance agents, our mission is to challenge the narrative that retirees must choose between affordability and security. What if we could offer them the best of both worlds? What if they could enjoy low premiums without fearing a catastrophic hospital bill? That's the mindset that led us to this strategy.

Your client's big win: Lower premiums, stronger protection

The premiums are significantly lower than a standard Plan G. But let's be honest, that deductible —$2,870 in 2025 — can be a concern. It is still much lower than traditional maximum out-of-pocket, but all risks must be considered. Acknowledging this risk is a crucial part of our fiduciary-minded responsibility — to present the entire picture, not only the positives — to build trust and combat the stigma associated with high-pressure sales.

It’s a potential financial shock that could derail even the most meticulously planned retirement, and it's especially critical to consider that health care research shows the average cost range of a hospital stay in the U.S. can range from several thousand dollars to well over $30,000.

The hospital indemnity plan is a straightforward cash benefit. If my client is admitted to the hospital, the policy pays them a fixed amount directly, often on a per-day basis. This isn't a reimbursement for medical bills — it's a cash infusion they can use for anything, but its primary purpose is crystal clear: to cover that HD Plan G cost. Our ability to translate this complex pairing into a simple, powerful concept is what separates a professional guide from a policy pusher.

Here’s a real-world example: Let’s say a client who is in good health falls, breaks a hip and requires a five-day hospital stay. Their hospital indemnity plan pays them $500 per day for that stay, totaling $2,500. This payout nearly covers the full HD Plan G deductible, transforming a potential financial headache into a minor inconvenience.

As advisors, this is how we can transform fear into financial security.

A closer look at benefits

It's essential to understand how hospital indemnity plans can protect clients from out-of-pocket expenses, particularly those related to Medicare Part B. A significant vulnerability for clients is the distinction between hospital admission and being under observation. While in the hospital, patients under observation have their expenses billed to Part B of Medicare. This is a common occurrence, affecting more than 2 million people annually, and can result in substantial costs.

Hospital indemnity plans address this directly by covering observation stays just as they would inpatient admissions. Furthermore, these policies often include other embedded benefits and optional riders designed to help cover additional Part B claims. Additional benefits may include skilled nursing, cancer treatments, copays and more.

Guiding your clients as an advocate

Here's how I structure the conversation with my clients, turning a complex product explanation into a straightforward, client-centric plan.

• Lead with empathy, not products: The conversation begins not with products, but with my client's deepest financial concerns. I ask about their biggest fears in retirement, like outliving savings or being hit with a significant health bill. This personalizes the discussion and allows us to show how a layered strategy, not a single policy, directly addresses their anxieties. It clearly demonstrates that my primary goal is their peace of mind, not my commission.
• Position yourself as a strategist: After understanding their fears, you introduce the HD Plan G and the hospital indemnity plan as a synergistic duo. Emphasize that the indemnity policy acts as a "gap-filler" for the HD Plan G's deductible, creating a layered defense rather than just selling another policy. This positions me as a strategic partner, not a salesperson, helping clients by co-creating a financial defense plan.
• Customize the plan: Determine the appropriate amount of hospital indemnity coverage needed to offset the high deductible. Since the 2025 Medicare deductible for Part B ($257) is included in the HD Plan G's high deductible, we can calculate a daily benefit that makes sense for their specific situation. Remind clients that once they have met this deductible, Medicare covers 80% of all Part B expenses. This process helps ensure that the solutions you provide are impactful and tailored to your clients’ financial needs.
• Champion transparency to build trust: We always discuss the limitations of a hospital indemnity policy, such as the fact that it is a supplemental plan and not a replacement for comprehensive health insurance, as Medicare is the primary source of comprehensive coverage. This commitment to honesty is essential for the integrity of our profession and a direct counter to negative agent stereotypes. This approach also builds trust and ensures there are no surprises down the road, aligning with the disclosure requirements from organizations such as the National Association of Insurance Commissioners.

Be the advocate your clients and our industry need

The traditional approach to Medicare planning often defaults to standard, high-premium Medigap plans. However, our clients today are seeking more than a one-size-fits-all solution; they’re looking for a strategy that aligns with their unique financial situation. This pairing can be an excellent solution for many in the senior market today.

More importantly, it demonstrates to us that we are a client-focused agent.

As we adopt these forward-thinking strategies, we also have a responsibility to advocate for our own profession. This means advising our carriers and field marketing organizatonss on the real-world needs of clients, highlighting how our consultative approach builds lasting books of business. It also means demanding and pursuing training that equips us to sell and advise with the highest level of integrity. Show your clients that you're not just a salesperson, but an advocate who can help them navigate the complexities of their retirement years with confidence.

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Steve Patton is the senior vice president, simplified solutions, life and health brokerage distribution at AmeriLife. Contact him at [email protected].