Recent increases in medical plan deductibles and out-of-pocket spending limits have created a coverage gap - where many participants lack the financial resources to cover the sudden expense of a critical illness.

With the entry of more affordable (and reputable) coverage options, an effective program can finally be designed to cover this gap.

The Offering
Critical Illness benefits offer a lump-sum payment upon diagnosis of a covered illness - typically heart attack, invasive cancer, stroke, kidney failure and major organ transplants. With disbursement directly to the insured, it funds payment of various out-of-pocket expenses, including health plan deductibles and coinsurance, family travel expense, child care, and lost income of caregivers. Benefit levels begin around $2,500 to as high as $100,000.

Critical Illness is not the daily indemnity plans heavily promoted on television. Premiums are reasonable and the coverage more sensible.

Several Factors Reveal a Coverage Gap
Higher deductibles and out-of-pocket limits - The median out-of-pocket maximum is $2,000 single / $4,000 family, but much higher on 'Low' option plans.

Lack of 'emergency funds' - Consumer debt is at an all time high and the personal savings rate is the lowest since the Great Depression (U.S. Dept. of Commerce).

Medical issues often lead to bankruptcy - Half of all personal bankruptcies are medically related, despite 77% having medical insurance at onset (Health Affairs, February 2005).

Growing use of HDHPs - Large gaps exist between funded HSAs and plan deductibles.

A Sample Offering
The market is responding with more reasonable coverage, lower premiums and flexible enrollments:

Voluntary options from $2,500 to $10,000 - Cover only health plan cost sharing and other reasonable expenses.

Offer a health screening reimbursement - $50 for an annual test; it returns much of the annual premium!

Enroll through existing platforms - Enrollers are not required. Off-cycle enrollments are permissible too.

Offer through a familiar name - Established and familiar benefit carriers now offer coverage.

Annual premiums start around $50 - The annual cost for a $2,500 benefit can equal one month's premium for 'other' daily indemnity coverage. Premiums may range from less than $1 per week for younger insureds at $2,500 to $3 or more per week for older insureds at $10,000.

A Funded Benefit Supports Other Health Care Strategies
An employer-funded Core benefit (e.g. $2,500) can support concurrent strategies:

Offer with an HSA election - Attract further plan enrollment. Critical Illness coverage and benefit payments are not deemed other health insurance.

Offset medical plan design changes - Offer alongside higher employee cost-sharing for a fraction of the plan design savings.

Update life and disability offerings - Critical Illness is a more relevant benefit, especially for younger employees.

A Benefit That Anticipates the Future?
Critical Illness is an established offering in countries with mandated or national health care coverage. High deductibles and out-of-pocket maximums are common and access to certain specialists often requires upfront payments. Leading employers fund Critical Illness benefits to make employees 'whole' and to further differentiate themselves in Canada, the U.K. and South Africa.

Contact us today to discuss a no commitment review of your exposures.