The good thing about Consumer Driven Health Plans is they allow employees to save money by taking advantage of their commitment to maintaining good health.
But, there is a downside. Because of higher deductibles and out-of-pocket maximums, a surprise major illness or injury can expose employees to financially crippling costs. These out-of-pocket costs can add up to thousands of dollars before an employee reaches their plan’s out-of-pocket maximum.
In a recent story, the Washington Post referred to the “financial toxicity” of cancer, detailing the high cost of treating the illness, and how it affects those afflicted. It’s the latest reminder of how unexpected misfortune can lead families to exhaust their assets and drive up debt.
Medical bills are the number one cause of bankruptcy in the United States. This, of course, doesn’t account for those who wipe out their savings or build up huge credit card debt to cover the costs.
There is a way to reduce (or completely eliminate) this financial risk.
Voluntary products such as critical illness insurance and accident insurance have become staples of employer benefit plans. For a reasonable cost, these products protect employees from the exposure left by today’s higher deductible plans.
The benefits are paid directly to the employee rather than the medical provider. This allows the employee to use the money to cover the unforeseen costs of catastrophic health events – loss of income, travel for loved ones, and recovery expenses.
If the critical illness benefit amount is matched to the out-of-pocket maximum of the employee’s medical plan, it’s possible to completely eliminate the financial impact of a major illness such as a heart attack, stroke, or cancer.
The amount of an accident insurance payout is based on the type of treatment needed for an injury, with injuries that are more severe (and subsequently require more expensive treatment) precipitating a higher benefit.
Together, these voluntary products supplement medical plans, filling the gap and greatly reducing risk.
In many cases, the combined premium for critical illness and accident insurance is still smaller than the difference between an employer’s most expensive and second most expensive medical plans. This allows employees to enjoy the cost saving benefits of a lower premium plan (with higher deductibles and maximums), and still protect themselves from the grave consequences of unexpected misfortune.
By: RALPH MORANO
Ralph Morano is the Senior Vice President of Communications for Univers Workplace Solutions.