Most employers offer major medical coverage to their full-time employees. But that still leaves workers and their families with significant exposure to financial hardship in the event of a serious medical emergency.
For example, even with insurance, treating a broken leg or undergoing emergency appendicitis surgery can mean thousands of dollars in out-of-pocket medical costs.
Meanwhile, most households can’t afford to cover a $1,000 emergency. Fortunately, employers can help by offering their workers voluntary hospital indemnity insurance that can provide peace of mind in case they have a serious medical episode.
Hospital indemnity insurance
This coverage offers a cash payment directly to the insured worker in the event of the hospitalization of themselves or a covered family member.
The worker can use this cash benefit for any purpose, including:
- Deductibles
- Copays
- Coinsurance
- Drugs
- Transportation
- Medical equipment, such as wheelchairs or walkers
- Offset lost wages
- Hiring home care assistance.
How coverage works
One of your employees, Sue, is diagnosed with appendicitis, and is scheduled for immediate surgery.
The average cost of appendix-removal surgery is over $30,000. Your group medical plan will pay for most of it, but while Sue has medical insurance, she still needs to pay $4,300 of out-of-pocket expenses due to her deductible ($2,300), coinsurance and other expenses not covered by her plan.
If she takes a few days off work to care for her daughter at home while she recovers, the net cost is even greater.
If she has a hospital indemnity plan with a $3,500 limit, instead of being out of pocket $4,300, the plan would cover all but $800 of that.
Little or no cost to the employer
Hospital indemnity coverage is generally offered as part of a voluntary benefits package, and often at little or no cost to the employer.
Employees pay part or all of the premiums via payroll deduction. Coverage specifics vary, but plans are designed to be affordable for all kinds of workers.
Coordination with group health insurance
Many employers use hospital indemnity coverage to help close the gap between the worker’s needs and what an existing group medical plan will cover.
In many cases, the availability of a direct cash benefit in the event of a qualifying hospitalization or emergency room visit can coax employees to opt for a lower-cost high-deductible health plan. That reduces overall costs for the business and the employee, while giving the worker peace of mind that they can foot the bill in case of emergency.
We can help you customize your voluntary benefits package and coordinate it with your existing group medical offering.
Note: Hospital indemnity insurance is a supplemental insurance product. It does not constitute comprehensive health insurance and is not intended to replace a qualifying major medical insurance plan.
Article Source: https://www.insurancenewsletters.com/