Consumers say supplemental benefits are valuable, research reveals

WASHINGTON – New survey research finds more than 80 percent of adults with annual incomes between $50,000 and $100,000 view supplemental insurance benefits as valuable for financial protection, with even more saying it is important for the federal government to protect access to these benefits.

The nationwide survey, conducted by Morning Consult on behalf of the American Council of Life Insurers (ACLI), also finds 38 percent of American adults with income between $50,000 and $100,000 have faced financial hardship resulting from expenses not covered by their main health insurance plans.

These uncovered health expenses include the cost of a home health aide, safety modifications to an apartment or home, transportation to a medical facility, co-pays and deductibles, and much more. Supplemental benefit products such as cancer insurance, critical illness insurance, accident insurance and hospital indemnity insurance pay for these costs.

People with income between $50,000 and $100,000 often turn to supplemental benefits for financial protection, though the product is popular with people at various income levels. People at all income levels reported that they view supplement benefits as valuable and that it is important for the federal government to protect access to them.

A new federal  “Tri-Agency Proposal” prompted the national survey on supplemental benefits, which took place August 10-13.

These benefits are not a form of primary medical coverage and are therefore distinct from the limited medical insurance products, such as short-term limited duration insurance, discussed in the Tri-Agency proposal. Life insurers are committed to ensuring that consumers are informed on what these products cover and the financial protections they provide prior to purchase.

Among other things, the proposal would disallow many benefits now available to policyholders of certain supplemental products. It also asks whether benefits from cancer or other specified disease products should be disallowed. The proposal would also create new requirements for employers by making them report supplemental benefits paid to their employees as wages. For the policyholder, that would mean these benefits are taxable and could discourage people from obtaining the financial protection they need.

The combination of higher taxes and the elimination of many existing benefits could lead to the demise of these financial protection products.

“This survey makes clear that Americans view supplemental benefits as an important financial protection tool. It also makes clear the strong public interest in the federal government supporting access to these products that help people facing difficult situations avoid financial hardship as health-related expenses add up,” ACLI President & CEO Susan Neely said.

The survey found for adults with incomes between $50,000 and $100,000:

• Nearly nine-in-ten (89 percent) said that it was either “very important” (64 percent) or “somewhat important” (25 percent) to have “the option to protect you and your family from medical expenses not covered by your health insurance that could cause a major financial hardship.”
• More than four-in-ten (41 percent) said they were not confident they could take on the cost of a home health care aide if they or an immediate family member were unexpectedly diagnosed with a severe illness, disease or injury.
• Nearly four-in-ten (39 percent) say they are most likely to borrow from their retirement savings if they are unable to cover expenses not covered by their health insurance plan.

“This survey tells a powerful story – financial hardships and economic backsliding that can result from uncovered health care expenses are real. Supplemental benefits provide a way for people to address these risks to their families’ financial wellbeing. It makes no sense to regulate them to extinction,” Neely said.

More information is available on:

• Morning Consult’s survey for ACLI
• Supplemental benefits