High deductible health plans are the most cost-effective option for employer-sponsored health insurance; however, the financial responsibility created by high deductibles can be daunting for participants. With high deductible plans, accidents, hospitalizations, chronic conditions, and many other medical and prescription services require participants to pay their deductible before the insurance “kicks in.” This often means those services are paid for out of pocket, which can be costly. Today we’ll discuss voluntary products and how they can be used to “fill in” some of the gaps created by high deductible health plans.
Voluntary products such as Accident, Specified Disease/Critical Illness, and Hospital Indemnity plans are a growing trend. These products assist employees in paying for out-of-pocket costs with higher deductible health plans, ultimately lowering an employee’s exposure. Although employers can pay for these plans for employees, they will often provide them on a voluntary basis due to the low monthly premiums and product differences. This allows employers to shift the cost to employees while retaining a robust benefits package.
With an Accident Plan, the insured receives a specified dollar amount for each type of service incurred due to an accidental injury. Monies received can be used to pay for deductible costs or copays incurred due to the accident. Some covered services include ambulance, hospital admission, x-ray, and follow-up doctor visits. These payments are not a reimbursement, therefore participants can receive their payment independent of the claim processing through their medical insurance. While these plans are often paired with a high deductible health plan, enrollment in a high deductible is not required to participate in an Accident Plan.
Specified Disease insurance benefits are paid out in a lump sum to participants and may be used as the employee sees fit. Some covered illnesses include heart attack, cancer, stroke, MS, and Alzheimer’s. Wellness benefits can be added to these policies and will pay an employee and their family members for receiving certain routine wellness screenings that are often covered in full by medical plans. The payments under this policy are usually at much higher dollar amounts, as the cost of medical care for these conditions are typically high.
The last product we’ll look at is Hospital Indemnity insurance. A Hospital Indemnity plan pays out a lump sum for hospital admissions and their associated expenses. Most plans pay a one-time benefit of $1,000 for an admission and $100 per day of confinement. These payments are designed to ease the burden of high-cost hospital admission and confinement copays and/or deductible expenses.
Insurance company data shows us that nearly 60 percent of members have between $0 and $999 in claims annually. Based on this information, we know that more people should be comfortable moving to higher deductibles, but members are scared of the unknown. The addition of voluntary products allows participants to insure against a specific risk and remove some of the unknown. By packaging a higher deductible plan with additional benefits tailored to the needs and expectations of your employees, we can create richer benefit packages without breaking your budget.