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Understanding Current Challenges Affecting You Now and In the Near Future
AEP is fast approaching, and this year will likely bring a unique set of challenges for Medicare solutions agents and clients alike. Significant Medicare Supplement (Med Supp) premium hikes are expected. Many are already experiencing a 20% or more increase in premiums on Plan G. Additionally, agents are facing the possibility of lower commissions and increased regulatory scrutiny. These challenges necessitate innovative strategies to ensure clients receive the coverage they need without breaking the bank, and agents continue to earn fair compensation.
Don’t wait for AEP to start! These issues are affecting your sales now! So, now’s the time to strategize for success through the opportunities available.
Opportunities
Combining hospital indemnity and Medicare Advantage (MA) is a possible solution because it offers needed protection at reasonable rates. This can provide good coverage at an affordable cost. But what if network restrictions are an obstacle for the client? For those clients, try pairing hospital indemnity1 with a high-deductible Med Supp plan such as high-deductible G. Helping clients through this strategy eliminates the network objection inherent with MAs and could result in lower premiums and good coverage for them, while ensuring you get compensated fairly.
What concerns do the hospital indemnity and Med Supp combination eliminate for the client?
This works exceptionally well for clients worried about the high cost of Plan G, but who are also concerned about network restrictions inherent in MA plans. The high-deductible Med Supp plan helps keep premiums affordable. Plus, Med Supp plans allow clients the flexibility to choose who they see for health care needs. The hospital indemnity pairing then helps fill in the gaps created by the high deductible in the Med Supp.
What concerns does this combination eliminate for the agent?
Carriers have generally been reducing or even eliminating compensation on Medicare solutions products including Med Supp plans, while others have left the market completely. Comparatively, hospital indemnity plan commissions have generally remained stable. So, by including hospital indemnity coverage with low-premium Med Supp policies, you stand to earn more while still providing suitable coverage at competitive premiums.
Hospital Indemnity 101
Hospital indemnity plans:
- Are supplemental insurance offerings that pay regardless of what other medical insurance the client may have, reducing the financial burden of a hospital stay
- Pay directly to the insured in lieu of to medical providers
Items that hospital indemnity pays for include:
- Hospital confinement
- Observation unit benefits
- Emergency room charges
- Transportation
- Lodging
- Inpatient mental health care
Simplified Underwriting for Hospital Indemnity Plans
One perk offered by hospital indemnity plans is its simplified underwriting benefit. Plans are guaranteed issue for ages 60 through 79. Simplified underwriting means the client is asked a limited number of health questions including if they have:
- Used oxygen
- Been treated or diagnosed with Alzheimer’s, Parkinson’s, multiple sclerosis or chronic obstructive pulmonary disease (COPD)
- Had diabetes requiring more than 50 units of insulin or three or more oral meds
- Been diagnosed or treated for heart attack, stroke or cancer
- Been on dialysis treatment
Additionally, hospital indemnity plans may have a six or 12-month preexisting condition limitation and a two-year contestability period.
Hospital indemnity coverage works as a great supplement to existing health insurance coverage. If clients on Medicare purchase a suitable hospital indemnity plan, then they could potentially save on Med Supp premiums by getting a low-premium, high-deductible plan to round out their coverage. One suitable low-premium Med Supp plan that pairs well with hospital indemnity insurance is high-deductible Plan G. For more details, Medicare.gov provides a comprehensive comparison of all available Med Supp plans.
High-Deductible Plan G and Med Supp 101
High-Deductible Med Supp plans:
- Offer identical coverage as its standard deductible counterparts, but will higher deductibles in exchange for more affordable premiums
- Require the deductible to be met before coverage can begin
Once the deductible is met, some of what these high-deductible plans cover include:
- Part A coinsurance and hospital costs up to an additional 365 days after Medicare benefits are used
- Part B coinsurance or copayment
- Blood benefit (first 3 pints)
- Part A hospice care coinsurance or copayment
- Skilled nursing facility care coinsurance
To Illustrate This Strategy
Here’s an ideal coverage option showing premiums and benefits when combining high-deductible Plan G with a quality hospital indemnity plan.2
| Customer | Monthly premium | Benefit |
| High-deductible Plan G - $2,870 deductible for 2025 | $44.24 | Everything Plan G pays after the deductible is paid |
| Hospital indemnity base plan | $18.30 | $300 per day for six days of hospitalization plus other base coverages |
| Outpatient surgery rider | $13.26 | Pays a $500 lump sum benefit for qualifying outpatient surgeries |
| Cancer rider | $4.47 | $2,500 – pays lump at benefit of qualifying cancer diagnosis |
| Skilled nursing rider | $11.17 | $100 per day up to 50 days |
| Total premium | $91.44 | Savings of $36.77 per month ($441.24 annually) that could be used on non-covered services like doctor’s office visits |
Claim Example No. 1
Relatively healthy individual who visits the doctor three times per year for hypertension. In this scenario, each visit costs $100, which saves the client $398.24 if they have the hospital indemnity/high-deductible Plan G combination versus just a Med Supp Plan G.
| Patient costs |
Med Supp Plan G only | Med Supp high-deductible Plan G with hospital indemnity plan |
| Annual premium | $1,538.52 | $1097.28 |
| Deductible | $257 | $300 |
| Hospital indemnity benefits received | $0 | $0 |
| Total cost to client | $1,795.52 | $1,397.28 |
Claim Example No. 2
In this example, the client has a three-day hospital stay after an emergency room visit due to a fall. After the hospital, the client also requires a 28-day stay at a rehab facility. The hospital indemnity plan pays $900 ($300 per day for three-day hospital stay, and $2,800 for the 28-days of rehab in a skilled nursing facility ($100 per day).
| Patient costs | Med Supp Plan G only | Med Supp high-deductible Plan G with hospital indemnity plan |
| Annual premium | $1,538.52 | $1,097.28 |
| Deductible | $0 | $2,870 |
| Hospital indemnity benefits received | $0 | -$3,850 (includes hospital indemnity base, emergency room visit and skilled nursing facility) per day |
| Total cost to patient | $1,538.52 | $117.28 |
Implementing This Strategy to Enhance Client Satisfaction and Agent Compensation
As an insurance agent, adopting this strategy can significantly enhance client satisfaction while ensuring fair compensation. With carriers reducing or eliminating compensation on traditional Med Supp products, incorporating hospital indemnity plans into your offerings can provide stability and profitability. These plans have generally remained stable in terms of compensation, making them a reliable addition to your product portfolio.
Need Help Getting Started?
Are you interested in selling hospital indemnity plans along with suitable Med Supps to help clients get good health coverage while saving on premiums? Are you ready to bypass the commission disruption game now by offering hospital indemnity solutions? Senior Market Sales® (SMS) would like to partner with you in this venture.
SMS is on the forefront of this and other strategies designed to help clients while putting dollars in your pocket. Regarding this particular strategy, Dwane McFerrin, Senior Vice President of Med Solutions at SMS says he “foresees this trend being the future as carriers have to adapt products that provide customers more affordable plans in the Med Supp space.”
To that end, SMS offers its agents a full library of Med Supp and hospital indemnity carriers to drive this combo strategy. Plus, as of the writing of this article, SMS will soon be expanding its hospital indemnity portfolio with a new product specifically positioned to pair exceptionally well with high-deductible Med Supp products. In addition to Med Supp and hospital indemnity, SMS offers a full range of MA, Part D, dental, life, annuity, long-term care and wealth management solutions.
A Little Bit More on the New Product Soon to be Available
As mentioned above, SMS will soon have a new hospital indemnity plan available from a top carrier. This plan is designed specifically to use with the high-deductible Med Supp strategy discussed in this blog. If this carrier’s Med Supp and hospital indemnity plan are purchased in tandem, claims can be auto-adjudicated to have claim payments made directly to the provider. To learn more about this upcoming opportunity, contact an SMS marketing consultant.
Additional Help for AEP and Beyond
AEP is approaching quickly and you need tools to help make the most of every available minute. SMS offers exclusive Medicare quoting and enrollment technology designed to maximize your efficiency and profitability. These tools are offered at no charge to SMS-contracted agents.
Contact SMS at 1.877.888.9996 to learn more about:
- Contracting for hospital indemnity plans
- The soon-to-arrive hospital indemnity product mentioned in this blog
- Available commissions for hospital indemnity plans and how to maximize your profitability
- Which carriers offer hospital indemnity plans
- How SMS can help you save time, make more money and put your practice in a position of distinction
SMS Looks Out for Your Best Interest
SMS leadership is active in Washington, working with regulators and legislators to ensure they understand our business and make your voices heard. To that end, we work closely with leading professional organizations who are advocating on behalf of insurance agents and your clients.
1Hospital indemnity plans are not available in all states. Consult with an SMS Med Solutions marketing consultant for details.
2Illustrations based on product coming soon to be available to SMS-contracted agents.
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