As employees are being asked to shoulder more of the upfront costs of their health insurance through high deductible plans, employers are looking for ways to help their employees feel more secure about taking on this additional risk. There are also a number of employers who wish to consider high deductible health plans but want to provide some additional level of protection for their employees. A growing number of employers are finding that voluntary critical illness benefits may be a way to help employees offset some of those concerns.
Critical illness policies typically provide a lump sum amount if someone is diagnosed with cancer, heart attack, stroke, kidney failure or needs a major organ transplant. They may also pay benefits for other medical problems. The program can be designed to cover a range of diagnoses or can be limited to only certain conditions (e.g. Cancer).
The number of health plans having high deductible health plans with deductibles of more than $1,000 has more than doubled since 2009 and cost shifting to employees is unlikely to stop anytime soon. As people’s financial exposure for medical care has increased these coverage gaps are going to widen and employees will need ways to fill them where they can. Critical illness insurance provides an opportunity to provide cash to an employee at a time when the employee needs it most and could help provide the cash to pay for things such as:
- Medical treatments not covered by the health plan.
- Home mortgage payments during recovery.
- Bill payments – from car payments to insurance premiums.
- Travel for treatments not available locally.
- Experimental treatments (not covered).
- Replacement of a spousal income while caring for the employee during their recovery.
Important Design Considerations
Unlike the employer’s basic health plan, critical Illness plans can be much more restrictive. Pre-existing conditions provisions may exclude, or impose a waiting period for benefits if you’ve had cancer or a heart attack. Certain types of critical illnesses policies may be excluded such as non-invasive prostate or breast cancer. Other critical illness policies may provide partial payouts rather than excluding coverage all together for non-invasive cancers, bypass surgery, etc. Plans may reduce benefits after the insured turns age 65 or 70. Finally, plans may provide one-time payouts while others may provide repeated payouts should you have a second “critical” event.
Properly designing a critical illness plan for your employees, will provide you with a way to strengthen your employees’ financial security, while building an attractive benefits package. And you can offer this coverage affordably to employees at no additional cost to you.
At UBF, our consulting team has helped many employers determine whether or not providing a critical illness program is right for them and provide support not only in making the decision to provide the coverage, but will be there during each step of the implementation to ensure decisions are made on a timely basis and are understood by your employees.
Please contact us if we can be of assistance to your company or if you have any questions about whether providing a critical illness plan is right for your organization.
Allan Phillips is a Managing Principal at UBF and has over 25 years experience as a senior health care and pension consultant. He has worked with Fortune 50, 500 and mid-size companies to assess, develop, and implement integrated benefits programs for global organizations.