The document discusses how rising healthcare costs are putting financial strain on employers and employees. It suggests that while employers want to control costs and offer competitive benefits, increasing deductibles and cost-sharing has led to many insured Americans struggling with medical debt. The document proposes that employers offer voluntary hospital indemnity plans to help cover employees' out-of-pocket healthcare costs and bridge the financial gap caused by high-deductible health plans. It argues that the total cost of an indemnity plan and higher deductible health plan is usually lower than traditional health plans alone.

1. You’ve probably heard the line about the three most important words in real estate
being “location, location and location.” In workplace benefits today, those three
words are surely “cost, cost and cost.”
If you’re like most human resource professionals, controlling benefits costs is one of
your top priorities. At the same time, you face strong pressure to offer a competitive
benefits program that will attract and keep top talent, and with good reason. Benefits
are a major factor when employees decide between positions at different firms. And
you’ll dig deep into the company coffers to replace a worker wooed away by your
competition: The cost of hiring and training a new employee can range from $4,000
to $40,000 (executiveboard.com, September 2012).
Reluctant to stop offering benefits such as health insurance, many employers have
turned to cost-sharing to keep premiums down. But this strategy is putting many
of America’s workers in serious financial jeopardy. The Kaiser Family Foundation
reports one in three Americans struggle to pay medical bills — despite the fact that
70 percent of those who do are insured.
How can this be? According to Kaiser, cost sharing is one of the primary contributors
to medical debt among the insured. The average annual deductible under job-based
health plans exceeded $1,200 for an individual last year. And that’s about three times
what many families can come up with. A recent Federal Reserve report found only
48 percent of Americans would be able to completely cover a hypothetical emergency
expense of just $400 without selling something or borrowing money. Sure, your costs
have gone up, but so have your workers’: Employees’ share of health care costs have
increased 150 percent over the last 10 years, now totaling about $5,000 a year (Aon
Hewitt Health Care Survey, 2013).
One solution to this seeming conundrum is offering your employees voluntary
benefit plans designed to help bridge their financial exposure. Products such as
hospital confinement indemnity plans can help offset the cost of hospitalization and
some of the most common out-of-pocket expenses associated with a hospital stay.
Some plans also offer additional coverage for health screenings, outpatient surgery
and diagnostic procedures.
Crunching the numbers: how it adds up
Here’s how it works. First, you increase the deductible for your health plan or the
coinsurance amount to lower your major medical premium. Then you offer your
employees a voluntary hospital confinement indemnity plan to help with their
increased out-of-pocket expenses. They can also use the benefits for nonmedical
expenses such as child care, travel and accommodations for treatment, or even
mortgages and car payments. You can pay the premium for this new coverage
yourself or allow employees to pay the premium. Either way, the total cost for both
plans is usually less than the previous health plan alone.
What to look for
Some key features to look for in this type of coverage include:
• Exempt from health care reform. Most hospital confinement
indemnity plans are exempt from the market requirements in
health care reform legislation.
• Flexible underwriting. These plans are often offered on a
guaranteed-issue basis and waive pre-existing conditions when
participation requirements are met.
• Higher benefit levels. Look for benefit levels that stay in line
with health care costs nationwide and with increasing deduct-
ibles and out-of-pocket expenses.
• Flexibility. You can tailor a plan to meet your company’s needs
and choose the options your employees will value most.
• Employer- or employee-paid. You can pay all or part of the
premiums or allow your employees to pay the premiums.
• No lifetime maximum. There’s no lifetime limit on payments
made to employees.
• Situs state issue. Does your company have locations in multiple
states? This feature provides consistency in all employees’ plans.
• Benefits aren’t tied to major medical claims. Employees can use
the plan’s benefits any way they choose, including nonmedical
expenses such as day care, groceries and utility bills.
• Benefits are paid regardless of other coverage employees
may have. Voluntary plans pay in addition to existing coverage
employees already own.
If you’re looking for a solution to rising benefits costs yet want to offer a
strong benefits plan that helps protect your employees against financial
exposure, look into hospital confinement indemnity insurance.
ABOUT COLONIAL LIFE
Colonial Life Accident Insurance Company is a market leader in providing
financial protection benefits through the workplace, including disability,
life, accident, cancer, critical illness and hospital confinement indemnity
insurance. The company’s benefit services and education, innovative
enrollment technology and personal service support more than 80,000
businesses and organizations, representing more than 3 million of America’s
workers and their families. For more information, visit www.ColonialLife.com,
www.facebook.com/coloniallifebenefits, www.twitter.com/coloniallife and
www.linkedin.com/company/colonial-life.
BY BLAKE ROGERS, JIMMY HINTON,
CHRIS MENARD and RICKY REYNOLDS
Ricky Reynolds
Arkansas territory sales manager,
Colonial Life Accident Insurance Company
rcreynolds@coloniallife.com or 501-246-8979
Jimmy Hinton
Mississippi territory sales manager,
Colonial Life Accident Insurance Company
jhhinton@coloniallife.com or 601-326-2954
Blake Rogers
Tennessee territory sales manager,
Colonial Life Accident Insurance Company
tblakerogers@coloniallife.com or 615-696-6672
Chris Menard
Kentucky territory sales manager,
Colonial Life Accident Insurance Company
cmenard@coloniallife.com or 502-272-9664
Control benefits costs
with voluntary coverage
Hospital
confinement
indemnity
insurance helps
bridge the financial
gap caused by
today’s higher-cost
health plans
22 www.HRProfessionalsMagazine.com