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MA Gap Filler - The Case for Hospital Indemnity
Why HIP coverage? A look at hospitalization and emergency visit statistics by age.
Jared Strock & Brenton Pyle
February 22, 2024
This week’s newsletter is Sponsored By: Telos Actuarial’s Hospital Indemnity Essentials Guide
Here is what you’ll find in this week’s newsletter!
Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.
Deep Dive 📚 - MA Gap Filler - The Case for Hospital Indemnity
Compliance Chatter 📢 - Additional CMS guidance on Inflation Reduction Act’s changes to Medicare Part D.
Sponsor Snapshot 🚀 - brought to you by Telos Actuarial.
Data Visual of the week 📊 - Data Visual highlighting 2024 AEP enrollment growth.
It’s only a 5 minute read, but it will make you 10x smarter.
Here are IMPORTANT LINKS 🔗 for the week:
10 Things to Know About Medicare Advantage Dual-Eligible Special Needs Plans (D-SNPs) - (link)
Older Americans say they feel trapped in Medicare Advantage plans - (link)
Half of rural hospitals are losing money. Rising MA enrollment likely won't help them - (link)
Major shift: Health insurers are suddenly coveting sicker patients - (link)
The two-midnight rule and Medicare Advantage: 7 updates - (link)
Senior Market Sales® (SMS) Acquires Medicare-Focused Pro Insurance Resources - (link)
Medicare Supplement Rate Filings – February 2024 - (link)
5 Best Medicare Supplement Providers For 2024 - (link)
Tips for Successful Medicare Supplement Rate Filings - (link)
Jared’s recent LinkedIn posts:
DEEP DIVE 📚
MA Gap Filler - The Case for Hospital Indemnity
Recently there has been a lot of talk about Medicare Advantage (MA) plans, and rightfully so!
The Annual Enrollment Period (AEP) recently wrapped up, numerous insurers have released earnings (including commentary on how MA experience impacted), proposed regulations on MA advertising and compensation have marketers and carriers on high alert, and reimbursement rates are seemingly always being discussed.
One key tool that carriers use to attract MA buyers is the use of novel embedded supplemental benefits within their plans.
Let’s take a step back – what benefits actually matter to seniors?
Insurance companies generally have an interest in covering “pure risks,” or “any uncertain situation where the opportunity for loss is present and the opportunity for financial gain is absent.” Hospitalization is one of the most significant pure risks covered (to some degree) by Original Medicare, a Medicare Supplement policy, or an MA policy.
There is a good chance that a senior will come away from a hospital stay with at least some financial liability, and very little chance that a senior will find financial gain in the hospital!
So, it’s natural that Hospital Indemnity Plans (“HIP”) are often sold alongside a primary insurance plan, such as an Affordable Care Act (ACA) plan or an MA plan, to minimize financial loss.
Even with the coverage provided by MA plans, seniors can still be left with out of pocket costs under a number of scenarios:
Hospital inpatient co-pays
Many MA plans have network requirements, which can leave policyholders with additional costs to be covered if they get care from an out-of-network provider.
Hospitalization often results in additional non-medical costs for emergency room usage, ambulance transportation, surgery, physician visits, travel, pet care, etc.
Plan benefits may “cap” the number of days for benefit payments – an especially long hospital stay (or multiple stays) may exhaust hospital confinement benefits.
Financially speaking, is this a big deal to seniors?
This chart shows hospitalization rates for the nation through 2019 (the most recent year reported by the National Center for Health Statistics), which does not include the COVID-related hospitalization spikes in 2020 and after. There have been general downward trends in these rates over time for all ages, but there is a clear increase in the frequency of hospitalization with age.
A few highlights:
For those age 85 and older, roughly 25% of the population had a hospital stay in recent years.
For ages 75-84, just under 20%.
For ages 65-74, just under 15%.
Those are not trivial percentages!
An additional benefit commonly included with Hospital Indemnity policies is an Emergency Room (ER) benefit. Like hospitalization, the frequency of ER visits significantly increases with age:
Highlights among seniors:
For ages 75+, the proportion with a visit has climbed above 30% in recent years.
For ages 65-74, it has moved from the 20% neighborhood up to about 23%.
Again, this is not uncommon for seniors.
Though they are not as flashy and do not draw nearly as much attention as MA plans, HIP policies can be an important part of health coverage for seniors.
Much like Medicare Supplement fills the gaps of Original Medicare. Hospital Indemnity plans fill the gaps of Medicare Advantage plans.
If you are interested in learning more about Hospital Indemnity coverage, the free Essentials Guide assembled by Telos Actuarial will give you a quick education. It’s a great place to start – download your copy here.
___
Sources:
Sponsor Snapshot 🚀: Telos Actuarial’s Hospital Indemnity Essentials Guide
This 3 page download will give you valuable information regarding the hospital indemnity market of supplemental health products. Get your FREE download here: https://www.telosactuarial.com/store
Telos Actuarial helps insurance carriers develop & launch Hospital Indemnity products designed for the senior market.
Market Intelligence
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Ready to Develop a new HIP product? → (let’s talk)
COMPLIANCE CHATTER 📢
CMS recently issued additional draft guidance on the Inflation Reduction Act’s Medicare Prescription Payment Plan, outlining requirements for Medicare Part D plan sponsors, pharmacy processes, and operational considerations, which would take effect in January 2025.
The Medicare Prescription Payment Plan will help reduce the burden of high upfront out-of-pocket prescription drug costs for individuals with Medicare prescription drug coverage by allowing them to spread out costs over the year rather than requiring they pay in one lump sum.
In addition to adding flexibility through a payment plan, the law cuts drug costs through provisions such as caps on out-of-pocket costs and the cost of insulin, and a mandate on drug companies to pay a rebate to Medicare if they raise prices faster than inflation.
Read more about the Medicare Prescription Payment Plan here. CMS is accepting comments on the draft guidance until March 16, 2024.
If you would like to learn more about our compliance services, reach out to [email protected].
DATA VISUAL of the Week 📊
The data visual of the week comes from us! It highlights overall 2024 AEP enrollment growth.
If you’re ready, here are some ways we can help you:
Newsletter Sponsorship opportunities: Promote your product or services to leaders in the Medicare space. Let’s discuss. (link)
Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)
Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)