With recent advancements in medical
technology, the probability of surviving the diagnosis of a
critical illness (like cancer, heart attack or stroke) is
relatively high compared to what it was two decades ago – but
the cost of that survival can be devastating to families who
are ill-prepared to handle the financial impact. If a
family’s key income provider suddenly suffers a catastrophic
set-back, even the best health insurance won’t cover the
resulting financial strain of extensive deductibles and
co-insurance payments, lost income, rehabilitation or other
hidden costs. A recent study by MetLife reveals that 45%
of full-time workers already live paycheck-to-paycheck, and
without adequate savings or coverage in place, a critical
illness could force them into joining the 1.5 million
Americans who declared bankruptcy last year – 60% of whom did
so because of unpaid medical bills. Because of the
impact such an event can have on an affected employee’s life
at home and at work, many employers are recognizing their role
in preparing their workers for these situations.
Making Use of
Disability Insurance
Typically the broadest in
terms of employer-provided ancillary coverage, disability
insurance benefits can help prepare the employee for a loss of
income during the length of a devastating illness.
Between voluntary short-term (STD) and long-term (LTD)
policies, employees often have several options for income
protection in the event of a disabling injury or
illness. With over half of employees already purchasing
financial protection products through the workplace,
disability coverage traditionally has been a staple among
employer-sponsored benefits.
However, fewer employers are
offering disability insurance every year. According to
LIMRA financial and insurance consultants, businesses that
offered disability coverage decreased from 59% in 2002 to 48%
last year. In any case, it is important to educate the
employee about what disability insurance is and how it can
help. It is also imperative that workers understand what
disability resources are available, whether through the
government (Social Security) or individual
policies.
Offering Supplemental
Coverage
To supplement STD and LTD policies and
bridge the gap between disability coverage and major medical
insurance, many employers are supplementing their traditional
benefits with individual disability policies and, in some
cases, an increasingly-popular option in critical illness (CI)
coverage. Most employer-sponsored CI policies are used
as a supporting component of their health and welfare benefit
plans, with some applying only to cancer-related issues and
others covering up to 12 different conditions including
permanent paralysis and occupational HIV. Some products
even cover childhood conditions such as Down syndrome or
cystic fibrosis.
When CI policies were first offered
in the workplace in the late 80s-early 90s, adoption was
encumbered by a lack of understanding. Today, however,
employers are taking a more proactive approach to
communicating the benefits of these policies and educating
employees on how to use them effectively. Other
businesses are taking advantage of the latest generation of
carrier products, with some plans offering protection for
recurring illnesses or incentives for wellness and
preventative treatments.
Looking to the
Future
Regardless of the prospects for healthcare
reform, employers continue to focus on preparing their
employees for catastrophic situations either as an educational
initiative or as a clear part of their benefit strategy.
As difficult financial circumstances continue to put working
families in a bind, businesses are taking it upon themselves
to ensure their employees are protected and nurtured as their
most valuable assets – and doing so through proactive
insurance policies can help employers navigate the challenges
of surviving these current economic
circumstances.
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