A new employer-paid hospital indemnity insurance helps defray employee health out-of-pocket costs.
Unum Group’s employer-paid hospital coverage offers workers a fixed cash benefit to cover out-of-pocket costs for events that require hospitalization such as childbirth, illness or accidents. But instead of contributing, say, $200 to an employee’s health savings account across 10 employees every year to help offset rising deductibles, the employer offers a fixed cash benefit of $2,000 toward hospitalization.
The larger benefit toward a smaller employee group is more effective than the smaller amount spread across a larger employee pool, Unum said.
“Money is a finite resource and employers need to figure out how to protect employees,” said Carlos Bello, director, product and market development for Unum.
Benefit brokers with clients looking to alter their medical coverage by boosting deductibles, increasing out-of-pocket maximums or raising employee participation rates might consider an employer-paid hospital insurance plan like Unum’s.
Employer-paid hospital insurance could also provide options for employers looking to add a second or third medical plan option to help employees as they take on higher health cost-sharing burdens, Unum said.
“With out-of-pocket costs associated with hospitalization rising, offering employees hospital insurance can help sweeten a benefits package to attract and retain top talent” Bello said.
Part of a Trend
Unum’s employer-paid hospital insurance was introduced this month. It offers employers a choice among three plan designs, each with progressively more coverage options that include surgical procedures, transportation and lodging benefits.
eUnum’s new product is a form of hospital indemnity coverage, which has been in the market for several years as a supplemental insurance benefit, said benefits expert Chad Cruse.
Many supplemental insurance plans such as accident, critical illness and hospital indemnity are employee-paid, but employer-paid models are becoming more common as employees are asked to pay for more health care out of their own pockets.
Employers that have experienced high employee engagement levels with employee-paid supplemental insurance are open to employer-paid programs, said Cruse.
“It’s part of a longer-term strategy that employers are adopting with supplemental health plans,” said Cruse, vice president of BenefitsPlace, a team of experts at the benefits enrollment and administration platform Benefitfocus.
Redirecting the Employer Dollar
Redirecting the bulk of the employer contribution to a handful of hospitalized employees yields better value, Unum said.
Employees get the protection they need and even if they enroll in an employer-sponsored medical plan with high cost-sharing, they are covered for hospital visits without having to dip into retirement savings or health savings account balances, Bello said.
Surveys find that half of employees have less than $1,000 in savings, which leaves them underfunded for a major medical expense at a time when more employers are offering high-deductible health plans as an option.
The average deducible has more than doubled over the 10-year from 2007 to 2017 as companies place higher burdens on employees to fund their own health care coverage through higher deductibles, limits and coinsurance.
Employers covered by insurers like United Healthcare or Blue Cross Blue Shield for major medical could enroll on a supplemental basis in Unum’s hospital insurance plan.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected]
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