By Pam Jenkins August 20, 2018
America’s workers
are concerned about health care — really concerned. In fact, a recent survey
from the Employee Benefits Research Institute showed 31 percent think health
care is the most critical issue in the country, far outpacing terrorism at 21
percent and nearly double the number who thought so five years ago.
Clearly, health
care reform hasn’t done much to reassure us about the availability and cost of
health care.
In the same study,
only 1 in 3 respondents said they were very confident or extremely confident
they could afford care without financial hardship. Increased spending on health
care is contributing to Americans' financial fragility.
More than a third
of those with higher health expenses report having difficulty paying other
bills, and nearly that many have high credit card debt. And more than 1 in 4
struggles to pay for even basic necessities.
Critical
Illness Magnifies The Problem
This financial
difficulty is magnified when it comes to critical illnesses. The survey shows
nearly a quarter of working Americans say they’re not very prepared or not at
all prepared to fund out-of-pocket medical expenses for critical illnesses, and
another third are only somewhat prepared.
What’s going on
here? If the Affordable Care Act means everyone has health coverage, why are so
many workers concerned about medical costs, especially for serious illnesses
such as heart attack, stroke or cancer?
There are two main
reasons. First, it’s important to realize that no health insurance plan —
“Cadillac” or otherwise — covers all the medical and nonmedical costs related
to a serious illness. And second, the costs of a serious illness such as heart
attack, stroke or cancer can be significant.
Serious
Illness = Serious Bills
Let’s start with
costs. The American Heart Association reports heart attacks and coronary heart
disease are two of the 10 most expensive hospital discharge diagnoses,
accounting for nearly $22 billion in costs a year.
Heart attack
hospitalizations cost patients a median of $53,000 and strokes cost $31,000. If
bypass surgery is needed, costs can skyrocket to the $86,000-to-$178,000 range.
Add onto those
bills the additional expenses following hospitalization, including
rehabilitation, therapy, ongoing medical care and drugs. Many patients and
their families also face significant nonmedical costs related to a serious
illness, such as home adaptations or equipment, travel for treatment, and lost
income from missing work.
Out-Of-Pocket
Costs Pile Up
Your clients may
assume the health coverage they offer their employees will cover most medical
expenses. But when you do the math, it’s easy to see how quickly the dollars
add up.
First, your clients
are probably offering higher-deductible health plans than they did just a few
years ago. That means employees are shouldering a heavier burden upfront, even
before a critical illness strikes.
Then employees are
likely responsible for copayments or coinsurance. Although 20 percent of the
tab may not be a concern for a $100 office visit, the 20 percent share of a
$100,000 hospital bill is another matter entirely.
Even plans that cap
out-of-pocket costs can still leave families owing thousands of dollars. When
you consider close to half of working Americans would struggle to scrape
together as little as $400 in an emergency, this kind of financial burden can
be devastating.
How
Critical Illness Insurance Helps
Critical illness
insurance can help bridge the financial gap between what health insurance
covers and out-of-pocket expenses.
Industry research
tells us that America’s workers are very concerned about our health care
system. This concern springs from rising costs as well as access to quality
care.
The good news is
that many of us feel positive about the health plan provided by our employer,
and many employers still see this as a way to attract and retain valuable
talent. However, rising costs for both employees and employers have become the
new reality.
Meanwhile,
employers are looking for more creative ways to help employees deal with the
financial impacts of an illness or accident by providing access to voluntary
plans, like critical illness, that provide cash payments to the insured to use
for whatever expenses are most pressing at that time.
Critical illness insurance
complements major medical insurance by paying a lump sum — typically $5,000 to
$100,000 depending on the plan — when the illness is first diagnosed.
Covered illnesses
usually include heart attack, stroke, end-stage renal failure, coronary artery disease
requiring bypass surgery, major organ failure and sometimes cancer.
Benefits are paid
directly to the insured to use however they are needed: for hospital or
doctor’s bills, copayments and deductibles, or even daily living expenses such
as mortgage payments, utility bills, food and child care. The coverage doesn’t
coordinate with other insurance, so the benefit amount isn’t reduced by what
major medical or other coverage pays.
Insureds don’t even
have to get sick to take advantage of their critical illness insurance. Many
plans include a wellness benefit that pays a set amount — $50 to $150 is
typical — for covered health screenings such as mammograms, colonoscopies or
X-rays. These tests can help in early detection to prevent more serious
illnesses from developing.
Who
Needs Critical Illness Insurance?
Unfortunately,
serious illnesses are far from rare. Every 42 seconds, someone in the U.S. has
a heart attack. For about 660,000 of those heart attack sufferers each year,
it’s a first occurrence.
Cancer cases also
are on the rise, with about 1.7 million new cases diagnosed every year.
The good news is more people are now surviving diagnoses that were once considered death sentences.
The good news is more people are now surviving diagnoses that were once considered death sentences.
More than 80
percent of those who have a stroke survive it. And death rates are declining
for all four of the most common cancer types: lung, colorectal, breast and
prostate.
However, surviving
the illness and surviving the financial burden are different matters. Critical
illness insurance is an affordable option to help your clients’ employees
better protect their families, their finances and their futures. If critical
illness insurance isn’t in the portfolio of solutions you’re offering your
clients, it’s time to consider adding it.
Pam Jenkins is
assistant vice president for product development at Colonial Life &
Accident. Pam can be contacted at pam.jenkins@innfeedback.com.
https://insurancenewsnet.com/innarticle/critical-illness-coverage-fills-the-gap-and-eases-client-concern
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