Pet insurance. Identity fraud insurance. Accident insurance.
If you buy your medical coverage through your employer, you’re likely to see these insurance add-ons during your company’s 2018 health insurance “open enrollment,” which typically runs from late October through early December.
Triangle employers are increasingly offering such supplemental insurance options to make up for coverage gaps as their own workplace health insurance plans get skimpier and costlier.
Accident coverage, critical illness and hospital indemnity are the most common forms of this sort of insurance. These policies – called “voluntary benefits” or “worksite plans” – are meant to supplement your regular workplace health insurance policy, not to replace your primary coverage.
Statewide, 41.4 percent of employers offer accident insurance or critical illness insurance, according to a 2016 survey by CAI, the Raleigh management services firm. Those two offerings are so new that CAI did not ask employers about them in 2014. CAI also does not ask how many employers offer hospital indemnity coverage, which is so new that only last week insurance giant UnitedHealthcare announced the availability of employer-based hospital indemnity coverage in North Carolina for 2018.
Here are some things to keep in mind:
Costs: You pay the full amount of the premiums, unlike traditional workplace health insurance, which is usually subsidized by employers.
Accident, illness and hospital insurance typically costs between $12 and $35 a month for an individual. You’ll be reimbursed for hospital visits and medical treatment – even if your health insurance pays for these services and if you have been reimbursed from your flexible-spending account or health savings account. In other words, you can pocket two payments – from your supplemental insurance and from your flexible-spending or health savings account – for treatment even if it was fully covered by your primary health insurance, said Rachel Richards, who oversees voluntary benefits plans for Hill, Chesson & Woody, a Durham benefits consulting firm.
The money does not have to be used for medical care. “It’s really about cash flow,” said health benefits consultant John McDonnell, a senior vice president with the Marsh McLennan Agency in Raleigh. “You get a payment based on the level that you bought. The money can fill the gap or replace loss of income.”
Signing up for the right supplemental policy at the right time could result in a reimbursement of thousands dollars after a hospitalization, surgery or other emergency. Rob Krieg is a health insurance consultant in Durham who takes out critical illness and accident coverage for his family of four at a cost of $800 a year in premiums. Kreig collected about $13,700 in payouts over two years for a torn Achilles tendon, a son’s broken collarbone, another son’s finger caught in a car door, and surgery for his wife. His wife’s medical expenses alone triggered a $10,000 reimbursement.
Pricing: Employers can negotiate bulk rates on supplemental policies, which tends to bring down costs, especially for older workers. But younger workers, whose costs are lower because of their age, might be able to find a competitive price offer by directly purchasing from an insurer rather than buying through their employer.
Exclusion clauses: These clauses limit reimbursements in the first year of coverage for critical illness, cancer coverage and hospital indemnity insurance. The exclusions cover a prior diagnosis anywhere from 3 months to 12 months before the effective date of the policy. Some employers eliminate the exclusion clause, but that would typically increase your cost of coverage.
Guaranteed issue: This mean that you can’t be rejected or charged a higher rate for a pre-existing condition. However, the plans do come with exclusion clauses that could result in denied payment for an illness or condition in the first year if it was previously diagnosed.
Strategy: If you expect an illness or condition, based on personal history, you might have to buy a supplemental policy one year before you expect to use it. If you are planning a pregnancy, you should buy the policy before you are pregnant; otherwise, it’s no good to you for those expenses.
Accident plans: These are the most common, Richards said, because they don’t include exclusion clauses for previously diagnosed conditions. Such policies would typically reimburse you for a doctor’s visit or an urgent care visit resulting from an insect sting, poison ivy, sprains, concussions and other injuries, Richards said.
Critical illness: These policies are limited to serious conditions, such as heart attack, stroke, renal failure and cancer. They can cover travel and lodging expenses.
Wellness benefits: Often offered in accident plans, critical illness and hospital indemnity. Reimburses you for a cancer screening or other checkups fully covered by your health insurance company. Some plans will cover up to two checkups/screenings a year. The typical payment ranges from $50 to $100 per checkup or screening.
Pet insurance: Might include exclusions for hereditary conditions. Your animal will be independently rated based on species and age. Typically covers cats and dogs, but some policies cover birds and exotic animals. Richards said her 8-week-old Golden Retriever puppy was priced at $40 a month for full coverage – preventive and illness – last year. Be sure you understand what is actually covered.
Prepaid legal: Provides basic legal consultations and discounts on other legal representation. Recommended for contracts, wills, letters, traffic violations.
Identity theft: Some plans just provide basic monitoring; others include financial recovery (up to $1 million) for losses resulting from having your private accounts hacked. A policy typically costs $10 to $12 a month. Be sure you know what you’re getting and not getting.
Purchasing plans: Typically favored by people who have no credit and no cash. Requires shopping from a dedicated catalog with prices that are higher than you can find online or on sale. The convenience of these plans is that your employer handles the automatic payroll deduction to pay for your purchases. If you leave your job, interrupt automatic payroll deduction and fall behind on your bills, however, you could end up on a credit report.