Health care reform and the Affordable Care Act are continuing to affect the wallets of both employers and employees. For employers, it means having to pass on more costs for health insurance to their workforce, with high deductible medical plans now becoming the norm for many. For employees, it means having to pay more out-of-pocket medical expenses than they did previously. As a result, many individuals who already have trouble making ends meet will experience significant financial difficulties if they are faced with a hospital stay or even a trip to the emergency room.
The statistics are disturbing: hospital charges currently represent about a third of the $2.7 trillion annual U.S. health care bill. And the average facility price for a hospital stay in 2011 was $15,674 a 13.1% increase from 2009, according to research from the Health Care Cost Institute. Data from the American Hospital Association show that in 2011, Americas hospitals treated 129 million people in their emergency departments. And the Centers for Disease Control and Prevention reports that every year there are 42 emergency room visits for every 100 people in the U.S.
Clearly, managing health care costs is a major objective for both employers and employees. One solution that can help address these issues for everyone involve is supplemental group hospital indemnity insurance. Its an effective way for employers to help relieve some of the financial pressure employees may experience by offering them access to reasonably priced coverage that can complement their medical plan. Because the coverage is a supplemental benefit usually paid for by employees, it also enables employers to enhance their benefit plans with no impact on their bottom line.
Group hospital indemnity insurance is intended for all employees, particularly those earning between $25K and $80K. Most group hospital indemnity plans offer a choice of flexible, employer-selected options, often including an HSA-compatible plan design, particularly important for those organizations that already offer their employees this type of plan. Plan designs can include outpatient and inpatient surgical benefits and a diagnostic procedure benefit, among other options, enabling an employer to tailor a plan that fits workplace needs while providing a key component of financial protection.
Employers can also elect to offer a hospital indemnity plan that may include additional options such as daily hospital confinement, hospital intensive care unit confinement, rehabilitation unit confinement, ER treatment and a wellness benefit. Employees, spouses and children can be covered under the employee plan if an employer chooses, but typically the employee must be covered to apply for spouse/child coverage.
Certain plans allow employers to make the plan portable, providing employees with coverage continuation that requires no new health questions or changes in rates. The ported coverage may even be able to remain inforce if the master policy terminates.
Group hospital indemnity coverage pays benefits directly to the insured to help cover the cost of hospital stays and certain related procedures and treatment. It works by paying a lump sum benefit when an insured is admitted to the hospital, regardless of the cost of care. The benefit can be used to cover out-of-pocket expenses such as co-payments, co-insurance, deductibles or any other costs associated with hospitalization, or to pay everyday expenses however the insured chooses.
What to look for
When an employer is reviewing possible supplemental group hospital indemnity plans, there are several important features to look for. For example, coverage that pays a larger upfront benefit upon admission rather than simply paying a daily benefit may be more beneficial to employees. A hospital indemnity plan should also offer a simple plan design with a lump sum benefit not tied to the employers medical plan. Employers may also want to ensure that the plan provides coverage for childbirth. Most importantly, the coverage should be designed to complement an employers health care plan, including both PPO and high-deductible plans, as well as having an HSA-compatible option.
Enrollment support is a key factor. The carrier should be able to offer a full range of enrollment options, including face-to-face meetings, a call center, online tools, plug-and-play messages and personalized paper kits. Employers should ensure that whatever communication methods are available will be compatible with the methods already in place and with which employees are comfortable.
Marilyn Finley is director, product and market development at Unum.
