It’s the right time to explore adding a Hospital Indemnity Plan to your product portfolio!

Did you know that the Senior Hospital Indemnity market is anticipated to nearly double in size within the next 10 years?

A Hospital Indemnity Plan (HIP) is a supplemental health insurance product that pays a fixed dollar amount when an individual is confined to a hospital.

For the senior market (65+), a Hospital Indemnity Plan fits neatly alongside a Medicare Advantage (MA) plan.  Senior Hospital Indemnity Plan benefits are often structured to help with the copays and coinsurance associated with Medicare Advantage plans, which continue to gain in popularity.

Highlights of Hospital Indemnity Plan product design include:

  • Fixed indemnity benefits that are easy to understand and administer
  • 50-60% loss ratio requirements (varies by state)

  • Average premiums less than $50 a month

  • Simplified underwriting, often including a guaranteed issue window that aligns with Medicare enrollment

Not only are these plans a winning product for policyholders, but there are several reasons why these are an excellent addition to a carrier’s product portfolio:

  • HIP products are anticipated to generate a lifetime profit margin in the 5-12% range

  • Whether you are considering or already in the senior market with other products, HIP plans can allow deeper exposure without large-scale investment

  • The indemnity benefit structure assists with limiting risk

Telos projects the Medicare Advantage market will grow from 30 million beneficiaries in 2022 to over 42 million beneficiaries by 2031. The Senior Hospital Indemnity Plan market has been successful at gradually increasing penetration into the Medicare Advantage market over the last 10 years and the graph below projects the Senior Hospital Indemnity Plan market size under two growth scenarios.

The conservative scenario extends the gradually increasing penetration rate trend seen in recent years.  The optimistic scenario assumes the penetration rate increase will be more significant, fueled by new entrants in the market and the continuing popularity of Medicare Advantage plans.

It’s clear that the growing Medicare Advantage market creates ample opportunity for carriers to step into the supplemental health space or expand their portfolio options with a Hospital Indemnity Plan.

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