In a recent post, we covered the value of an insured product versus something that may act similarly, but is not technically insurance. You can read the details here, but in short, insurance delivers much greater value because of its ability to ebb and flow.
We also explained that while primary insurance plan premiums are rising steadily, making it more difficult for employers to offer rich plans, layering with supplemental insurance can be a great way to expand coverage.
However, not all supplemental insurance plans are created equal.
Voluntary Insured Supplemental Plans
Also called “gap-plans,” voluntary insured supplemental benefits are plans such as Critical Illness Insurance, Hospital Indemnity, Accident Insurance, Specified Disease, etc.
Voluntary insured benefits can be offered by the employer and opted into by the employee. They are generally employee funded, though the employer may elect to contribute. These benefits offer flexibility by allowing employees to self-select which coverages they would like to create a benefit package that meets their needs.
These plans can help fill gaps that primary plans don’t cover; however, they do not fill the broad spectrum of gaps. Voluntary insured plans are typically “event-driven” and limited in coverage to the defined scope.
The problem ends up being that an employee could opt into Critical Illness Insurance, Hospital Indemnity, and whatever else is available to them through their employer, and fall under the misconception that they are completely protected. But they could still end up paying for healthcare costs out-of-pocket. While these plans are great at filling the specified gap, employees still have the possibility of being unprotected if a health issues strikes outside the parameters of these plans.
Expense Reimbursed Insured Supplemental Plans
Another type of supplemental insurance is expense reimbursed insured benefits. Like voluntary insured plans, they can be layered onto the primary plan, but there are some key differences, too.
Typically employer-paid, expense reimbursed insured plans offer different levels of reimbursement for qualified healthcare expenses. Unlike voluntary benefits, these reimbursements are for all types of healthcare expenses and don’t require a certain event to trigger coverage. On the contrary, enrolled members can submit claims for any covered expense until the specified level limit is met.
These plans offer a broad range of coverage to fill primary plan gaps such as co-pays, deductibles and balance bills. Some solutions go even further to offer coverage for non-formulary Rx and private hospital rooms, as well as vision and dental.
Far Reaching Value
So while voluntary insured plans can be of significant value during a specific time or event, expense reimbursed insured plans have much farther reaching value that is not as limited. Insurance with greater value is not limited to a defined scope, but it’s protection that employees can use when they need it.