Business of Well-being

Gain a Competitive Edge with Critical Illness

According to a 2009 study by Harvard researchers, 62 percent of personal bankruptcies in the United States in 2007 were caused by health problems and 78% of those filers had health insurance. As healthcare costs continue to rise faster than household incomes, patients with a serious medical condition might turn to credit cards to pay for their care.

Twenty-nine percent of low and middle-income households with credit card debt used their plastic to pay off medical expenses, according to a 2007 study by the Annie E. Casey Foundation along with other public foundations.

It's unfortunate enough when someone gets sick or is diagnosed with a chronic condition, but that person shouldn't have to worry about the bills or even the risk of losing their home on top of it all. One benefit option can offer peace of mind as well as a sense of financial security during a crisis: critical illness coverage.

Employers are becoming increasingly aware of how important critical illness benefits can be for employees. Eighty-one percent of human resources professionals say their organizations review their benefit programs annually, according to the Society for Human Resource Management.

Since most companies will review their options, it's important to understand how critical illness coverage can align with a company's current benefit offerings.

Make the Case: Positioning Critical Illness Coverage

It is important to review your entire benefit program before recommending critical illness. Take time to understand employee demographics and any unique situations with the employees or the employer. This discovery process will help you build a more successful strategy.

It's important to determine how much, if any, employer funding is available since some critical illness plans can be purchased by the employer for their employees. Determine the current coverage amounts under your medical plan as well as other benefit plans, including voluntary benefits.

A recent survey by Anthem Blue Cross and Blue Shield reveals that employees enroll in voluntary benefits for a variety of reasons. The top three determining factors are cost savings (54 percent), greater protection for their families (50 percent) and ease of mind (44 percent).

What makes critical illness benefits unique is that these funds can be allocated at the individual's discretion - whether it is for co-pays, out-of-network specialists, or normal living expenses, such as a mortgage, car payments, utilities, groceries, tuition, and child care - providing maximum flexibility.

Another important differentiator is that the benefits are paid in one lump sum, which eliminates the need to deal with ongoing paperwork or submit doctor bills and receipts. When introducing this coverage option to employers, it's important to position it as a protection for the future.

Critical illness coverage helps to ensure that certain standards of living are met. However, instead of only being available at retirement or during a terminal illness, funds are available once a covered condition is diagnosed. Critical illness benefit amounts typically range from $10,000 to $20,000 and provide benefits during working years.

In 2010, an estimated 1.5 million new cancer cases were diagnosed and cardiovascular disease affected tens of millions of Americans. However, advances in healthcare are helping people live longer and survive these serious illnesses.

According to the American Cancer Society, the five-year survival rate for all cancers diagnosed between 1999 and 2005 is 68 percent, up from 50 percent in 1975 to 1977. By being able to cover a variety of expenses with this financial protection insurance, the beneficiary and their family can focus on what's important: their health and making a full recovery.

Enable Employers to Make Decisions

As employees assume more responsibility for their health and welfare, voluntary benefits will continue to increase in popularity. Benefits need to be targeted to each organization. For example, some plans can be offered to companies with very few employees while plans that focus on larger employers provide the opportunity for more substantial guarantee issue and large benefit amounts.

Be aware of plan features that all employees can use, such as health screenings and blood tests. For example, annual mammograms would be a valuable health benefit for an employer that has a predominantly female workforce. Colonoscopies, stress tests, and cystologic screenings (Pap smears) are also commonly covered in a critical illness benefit.

These benefits allow the plan to pay up to a certain amount for costs relating to the exam including childcare and transportation. It's important to highlight those valuable critical illness benefits when featuring the robust plan offerings to employers.

It's also vital to provide a seamless enrollment process by offering communication options that suit a variety of needs including onsite meetings, call centers, and online tools. Conducting a comprehensive educational process is also essential so that employees understand the value of critical illness benefits and can make informed decisions about their coverage.

Through the Eyes of an Employee

It's necessary for your senior leadership team to support the benefit offering and facilitate information sharing with the employees. Typically, the most effective way to educate employees is to use a professional benefit communication firm.

It is a competency that can help you determine how critical illness can complement existing benefits, reach employees most effectively, and offer a positive experience for your clients. It's important to work with your benefit advisor to build a benefit strategy and select plan options that best suit the employees' lifestyles.

For example, an employee who is married or has a family may want to know whether the critical illness benefit covers their spouse and children or just themselves. Employee and their families will find the plan more appealing if it can be tailored and if you can show how it can be adjusted easily based on any changes that may occur.

On top of the day-to-day stress of work and family life, deciding on benefits may not be high on a person's to-do list. Since this may seem like a daunting task, a great deal of assistance is provided by the insurance carrier and benefit advisor.  Employees should know that assistance is available every step of the way.

In addition to offering your expertise, encourage employees to use all communication vehicles that are available including new Web based tools. When you make employees aware of what assistance is available, they will have the resources to explore plan options and determine which one suits their lifestyle.

Final Thoughts on Critical Illness Coverage

People who are diagnosed with a critical condition are affected physically, emotionally, and financially - with unexpected illnesses and injuries causing 350,000 personal bankruptcies each year.

Critical illness makes up for what regular insurance doesn't cover even if a company offers a robust health insurance plan. That's why it is essential for brokers to explain the value of this important benefit to employers and encourage them to offer this coverage to their employees.

About The Author

Thomas (TJ) Gibb is the National Practice Leader of Specialty Benefits for Humana. TJ is responsible for distribution and strategy for the group life/AD&D, disability, medical stop loss and voluntary benefits.  For information on Humana's critical illness benefits or other benefit products and services, call 1-800-4-HUMANA.

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