Rising Healthcare Costs: How Supplemental Insurance Can Help

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This post is a paid advertisement by Securian Financial Group, Inc. All opinions expressed are my own, and I’m not a customer of Securian or its affiliates.

As open enrollment rolls out this month for 2018, Americans may be more worried over healthcare costs than ever. And, can you blame them?

Recent studies from financial services provider Securian Financial Group underscore this looming problem, showing how confusion and a lack of preparedness might leave us worse off next year. Check out these findings from Securian, gathered from two studies published in 2017. Of those surveyed with employer-sponsored health insurance:

• Nearly half of parents have had a child experience an injury requiring medical treatment, with 71 percent of those parents saying they paid up to $2,000 in out-of-pocket medical costs. The most common incident involved an emergency room visit. (Securian Benefits Survey, September 2017)
• During the past year, 22 percent of those who have health plan deductibles had to pay out-of-pocket expenses for an accidental injury. Of those, Millennials (32 percent) were the most likely age group to have paid an out-of-pocket expense for an accidental injury, compared to 18 percent of Gen Xers and 16 percent of Baby Boomers. (Securian Benefits Survey, June 2017)
• Twelve percent do not know how they would pay a $500 out-of-pocket medical expense and 21 percent are unsure how they would pay a $5,000 out-of-pocket medical expense. (Securian Benefits Survey, June 2017)
• Sixty-three percent are concerned this benefits open enrollment season that their plans’ out-of-pocket costs will increase, and almost half (47 percent) are very or somewhat concerned their employer will not offer enough benefit options during open enrollment. (Securian Benefits Survey, September 2017)

According to Securian, many employees, and especially older workers, may be making the mistake of brushing off open enrollment because they think it’s the “same old thing” or irrelevant to their lifestyle.

Securian recommends that employees should instead take this time to learn about new benefit options and to maximize opportunities that prepare themselves and their families for health and financial well-being in the year ahead.

All About Supplemental Group Insurance

Supplemental insurance products are available to consumers directly, as well as through employers to their employees. A growing number of employers are offering their employees a range of group insurance products aimed at protecting workers and their family members. Examples include group accident insurance, critical illness insurance and hospital indemnity insurance. Here’s how each type of coverage works:

Group Accident Insurance – If an insured employee or covered dependent experiences an accidental injury covered in the policy, the insured receives a payout that can help cover deductibles, out-of-pocket medical costs, everyday living expenses or be used in any other way the insured chooses.

Group Critical Illness Insurance – If an insured employee or covered dependent is diagnosed with a condition covered in the policy, the insured receives a payout that can help cover deductibles, out-of-pocket medical costs, everyday living expenses or be used in any other way the insured chooses.

Group Hospital Indemnity Insurance – If an insured employee or covered dependent is hospitalized, the insured receives a payout that can help cover deductibles, out-of-pocket medical costs, everyday living expenses or be used in any other way the insured chooses.

Unfortunately, not everyone knows these options are available, or even how they work. According to Securian’s surveys, only 44 percent of employees with health insurance through work know that many employers offer group insurance benefits that can be used to help pay for costs associated with an accident, hospital stay or critical illness. And even fewer know how these policies work; for example, fewer than half (47 percent) of workers know that a group accident insurance policy may provide a benefit for ambulance costs associated with an injury or if a child breaking a bone while playing sports may be covered under a group accident insurance policy.

Additional misconceptions about accident insurance include the fact that 14 percent of workers believe house repairs after a fire are covered, and 21 percent assume vehicle damage from an accident is covered. Further, 22 percent of those polled by Securian have no idea what accident insurance covers.

The thing is, employees who know about these benefits – and how they work – tend to take advantage. Securian found that among the employees they surveyed who have access to supplemental insurance benefits at work and are aware of them, 64 percent of those offered accident insurance signed up, 59 percent of those offered hospital indemnity insurance signed up, and 47 percent of those employees given the option signed up for critical illness insurance.

The Bottom Line

It might be wise to ask your employer what supplemental group insurance policies they offer. You could be missing out on a benefit that could help.

Critical Illness Insurance, Accident Insurance and Hospital Indemnity Insurance policies provide limited benefits. These policies have exclusions, limitations, reduction of benefits, terms under which the policy may be continued in force or discontinued.

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