How to Make a Sale to a Medicare Advantage Client: Hospital Indemnity Plans

Even if you don’t primarily sell Medicare Advantage plans, there’s still a way to make a sale.

Hospital Indemnity Plans are the perfect tool to:

• Land a sale with a client who already has a Medicare Advantage plan
• Widen your portfolio
• Recapture ex-clients
• Never leave an appointment empty-handed
• Build an array of policies with a client to increase their loyalty to you

And why should you suddenly care?

Unfortunately for agents, a large amount of Med Supp clients have switched to Medicare Advantage over the last few years.

Recent statistics reveal that MA enrollment is growing, resulting in over 33% of all Medicare beneficiaries being enrolled in the plan. That could be a huge hit to your potential sales and commissions.

When a Med Supp-only agent goes on an appointment to work a Medicare lead, there’s roughly a 1-in-3 chance that the prospect is going to have an MA plan.

So, you have two options here (hint: one is way better than the other):

1. You can either pack your bag and leave empty-handed, or
2. You can be a rockstar agent and still manage to make a sale.

We vote for the latter.

What’s an HIP?

An HIP (Hospital Indemnity Plan) is the perfect sell to the following groups of people:

• Medicare Advantage clients,
• People who can’t afford a Med Supp,
• Seniors turning 65 during open enrollment (if can’t get through regular underwriting due to bad health history),
• Anyone under 65 on a major medical plan, and
• State retirees and teachers, who have major holes in their coverage that’s provided by the state.

The HIP helps offset the expensive co-pays at the doctor. If they might have out-of-pocket costs, this is coverage they need.

In essence, this plan offers daily benefits for hospital stays and ER services. With an MA plan, you’re going to have co-pays for hospital stays – that’s one of the reasons we always recommend a Med Supp instead.

However, if your client is set on keeping their MA plan, a Hospital Indemnity product can offset those expenses.

A potential client will find this plan particularly useful if their MA co-pays are high. A typical HIP will offer $250-$400 per day for hospital stays.

There’s also optional riders to choose from, like:

• ambulance transportation,
• regular office visit co-pays,
• skilled nursing facility charges,
• dental benefits, and
• even a lump sum cancer benefit, which goes up to $10k.

How much does this cost?

Hospital Indemnity Plans are typically very affordable for a 65-year-old.

We did take a look at the cancer benefit rider, and for a 10k lump sum added on, the cost would be slightly more per year.

Finally, if your client’s MA plan doesn’t cost them anything – or has a very low monthly premium – they might as well add an HIP to help cover those deductibles and copays. It will likely save them money.

It’s also important to note that state retirees don’t pay anything for their plan – that makes selling a cheap HIP very easy. It’s not hard to sell an inexpensive product that eliminates the cost of co-pays and deductibles for the client.

How do I land the sale?

As always, education is key. You need to effectively explain to your client what they’ll be required to pay out of pocket for the various co-pays. Those costs can include:

• Doctor office visits
• Inpatient hospital care
• Ambulance service
• Skilled nursing care

Then, once they see the gaps in their coverage, you can show them how an HIP can cover them for those out of pocket expenses.

Finally, we recommend offering three quotes. If you do any more than three, the client may become indecisive. 

You can also vet your client before providing quotes to see if any of the riders would be of interest to them.

Related: How Aetna's Hospital Indemnity Flex Plan Works (And How to Sell It)