When an employer that was switching to a high-deductible health plan asked The Farmington Company, a voluntary benefits communication and administration firm, to do a benefit meeting to boost employee participation, Farmington recommended they include voluntary critical illness as a benefit. Adding CI "to help allay some of the fears for those worried about the big stuff" resulted 

With cancer, heart attack and stroke making up the top three critical illnesses, it used to be that CI plans only covered these conditions. They also got a bad rap, says Rob Shestack, senior vice president, voluntary benefits and national practice leader, AmWINS Group Benefits, because many thought such insurance was unnecessary. "But that was when ... medical insurance was basically $2 copays. No out of pocket. It was fairly reasonable," he says.

Now, around 60% of all bankruptcies are due to medical-related expenses - and most of those declaring bankruptcy had major medical coverage, Shestack says.

"A lot of folks market critical illness as a health care complement - and it is - but it also needs to be marketed as a financial protection benefit as well," says Shestack, adding that the average bankruptcy is around $8,000 ($15,000 if cancer-related), while the average CI payout is $17,000.

Most carriers now cover nine to 15 conditions with lump-sum payments that make communications easier and more effective for the consumer, says Joan L. Price, senior product specialist, Colonial Life.

"It gives the consumer more freedom in using that benefit," she says. Like Mantz, Price is also seeing a lot of CI plans paired with high-deductible health plans.

This article was reprinted with the permission of Employee Benefit News.

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