The AFLAC duck has become synonymous with Voluntary Supplememntal and Critical Illness benefits, see Consider Supplements to Primary Medical Plans. Aflac answers the question to “how do I plug in the gaps of eroding medical benefits for employees”. With office copays as high as $60, average hospitalization exposure of $2000, in-network $1000 deductibles for diagnostics and $100 ER copays this is becoming a valid concern.
Payment, not reimbursement: the insured does not have to spend money up front, in terms of a deductible, in order to get the benefit. Having an accident or being diagnosed with a specific illness, such as cancer, triggers the payout. The employee doesn’t have to incur an expense and then wait for reimbursement. This is important because employees may be facing high deductibles in their medical plan coverage, so having the ready cash is a major help.
Not tied to medical plan: A common point of confusion with both accident and critical illness products is that their benefits are somehow “offset” by medical plan benefits. It’s important that the employee and the employer alike understand that these limited benefit policies perform as supplements to medical coverage, but are not in any way linked to them and their benefits are delivered with no offsets or reductions once policy requirements are met.
Use money in any way: The nature of medical plans is that insureds only get reimbursed for “qualified expenses,” which the insurer details within the program. With both accident and critical illness, since insureds receive a lump sum for particular injuries or diseases, they have no such restrictions on how they use the money. For example, a person who loses the use of a limb might use the accident policy’s payout to make home modifications that make life easier. Someone with a cancer diagnosis might wish to consult with a specialist across the country, and can use the critical illness policy’s payout for travel and lodging expenses. If an experimental treatment is not covered by a medical plan, the insured can use the critical illness policy’s payout to spend the $10,000 or more to pay for the treatment.
Direct and transparent: For most people, a glance at the list of potential injuries on an accident policy, or taking on the topic of dread diseases, can generate queasiness. Who really wants to think about winding up in a coma or fighting cancer? But the policy benefits are clear and transparent, unlike the sometimes-mystifying coverage rules in medical policies. Employees will get the message that, by offering these voluntary benefits, the employer is raising important financial-security issues and providing affordable solutions to address them.
Simplified claims: In most cases, to receive a benefit the insured simply provides the insurer with a claim form and applicable paperwork from a care provider that documents the injury or diagnosis of disease. With accident insurance, additional paperwork might be required to determine whether the claim stems from the insured taking part in certain inherently dangerous activities, such as bungee jumping or car racing, in which case benefits might be denied. Such restrictions will be clearly stated in the policy.
Ready availability: Generally, accident insurance payments are issued to employees without any pre-existing condition limitations. Critical illness insurance might require the employee to fill out questions on an application for coverage, although under certain conditions, employees may be eligible for a guaranteed issue offer without requiring answers to health questions. Regardless, employees would have a hard time finding either of these coverage options at such affordable prices outside of the group voluntary benefits context. Premiums of only $20 or $30 a month for each insured are common in these worksite products.
Family coverage: Depending on the carrier, the employee can opt to get coverage for a spouse and dependent children (up to a certain age) as well. This is a real advantage if a working spouse does not have coverage through his or her employer. But, this is equally important for spouses who work in the home, because household finances might be more constrained and thus make the additional policy benefits even more critical. In the case of children, the accident coverage usually pays benefits for non-professional sports injuries, a common occurrence. Depending on the injury, the out-of-pocket costs for emergency room services, copays and deductibles for medical care and follow-up physical therapy can quickly exceed $1,000. An accident policy typically would provide benefits to cover the lion’s share of those costs.
Portability: In most cases, accident insurance allows employees and dependents to continue the coverage after leaving the employer or retiring. For critical illness, there may be certain conditions involved, but the key is that most policies allow employees and dependents to continue enjoying these coverage options at group rates wherever life might lead them next.