Most employers offer major medical coverage to their full-time employees. But that still leaves workers and their families with significant exposure to financial hardship in the event of a serious medical emergency.
For example, even with insurance, treating a broken leg or undergoing emergency appendicitis surgery can mean thousands of dollars in out-of-pocket medical costs.
Meanwhile, most households can't afford to cover a $1,000 emergency. Fortunately, employers can help by offering their workers voluntary hospital indemnity insurance that can provide peace of mind in case they have a serious medical episode.
Hospital indemnity insurance
This coverage offers a cash payment directly to the insured worker in the event of the hospitalization of themselves or a covered family member.
The worker can use this cash benefit for any purpose, including:
How coverage works
One of your employees calls in and says she had to take her daughter to the hospital the previous night with severe stomach pain.
The doctor diagnoses the girl with appendicitis, and schedules her for immediate surgery. She spends two days in the hospital. She'll be fine. But your employee now has some significant medical bills.
The average cost of appendix-removal surgery is over $30,000. Your group medical plan will pay for most of it. But if you have an 80-20 plan, your worker is still responsible for her deductible (averaging over $1,600), plus 20% of that cost, or over $6,000.
That leaves your worker exposed to a total out-of-pocket cost of over $7,600.
If she takes a few days off work to care for her daughter at home while she recovers, the net cost is even greater.
Few people can cover that. When faced with medical bills like that, many of them go into debt, or skip needed medical care, which can lead to still greater costs down the road.
In fact, medical bills are a major contributing factor to personal bankruptcy - even for people with health insurance.
Little or no cost to the employer
Hospital indemnity coverage is generally offered as part of a voluntary benefits package, and often at little or no cost to the employer.
Employees pay part or all of the premiums via payroll deduction. Coverage specifics vary, but plans are designed to be affordable for all kinds of workers.
Coordination with group health insurance
Many employers use hospital indemnity coverage to help close the gap between the worker's needs and what an existing group medical plan will cover.
In many cases, the availability of a direct cash benefit in the event of a qualifying hospitalization or emergency room visit can coax employees to opt for a lower-cost high-deductible health plan reducing overall costs for the business, while giving the worker peace of mind that they can foot the bill in case of emergency.
We can help you customize your voluntary benefits package and coordinate it with your existing group medical offering.
Note: Hospital indemnity insurance is a supplemental insurance product. It does not constitute comprehensive health insurance and is not intended to replace a qualifying major medical insurance plan.
An AssuredPartners Agency
In February 2020, Molyneaux Insurance joined AssuredPartners, the 11th largest insurance brokerage in the U.S. This partnership provides us access to additional capital and a national footprint that enables us to continue to negotiate the most favorable coverage terms and conditions for our clients, and allows us to provide an even broader spectrum of risk management support services.