Padding Health Care Coverage

With rising deductibles and premiums, employers are offering more elective and consumer-directed benefits to help offset the higher out-of-pocket costs their employees are paying

By Lisa Gibson

As health care costs increase, many employers are changing the insurance coverage they offer their employees. It saves costs upfront for the company, but leaves employees with higher premiums and deductibles, paying more out-of-pocket costs for care. As a result, more employers are offering support or even full coverage of elective benefits, says Dan LaRock, a Sioux Falls-based principal at SilverStone Group.

Elective benefits have traditionally been paid in full by employees and purchased through a separate insurance provider than the standard employer-supported health insurance. The plans pay cash to the policyholder in the event the coverage is needed.

“We are seeing and having far more conversations with employers around the region who are seriously thinking about turning that employee-paid benefit into an employer-supported or an employer fully paid benefit,” LaRock says. “An employer can deliver something that helps provide insulation against the things that could happen, the things that employees fear.”

With accident coverage, for example, if a policyholder falls and breaks an ankle, has a $3,000 deductible but doesn’t have $3,000 on hand for the bill, the cash paid through the accident plan can help meet that deductible.

As employers consider helping to cover those elective plans, they’re turning to their health care coverage consultants and brokers to determine what to offer and whom to purchase from. “Quite frankly, I think most brokers are talking to their clients about it already,” LaRock says.

Choosing Plans

Most large-scale health insurers such as Medica or Blue Cross Blue Shield don’t offer the elective benefits. They’re found with companies like Aflac or State Farm, LaRock says. They can include cancer coverage, critical illness, hospital indemnity, accident and more. Employers considering supporting or fully covering elective benefits should thoroughly analyze what they need, not “kitchen sink” the coverage, LaRock says.

Consultants help make sure the chosen elective benefits line up with the core benefits offered by the company, says Lisa Hartman, elective benefits manager with SilverStone. They’ll analyze claim utilization on the health plan to see if the company has high instances of heart attacks, cancer diagnoses or hospitalization. Accident plans usually fit well with most companies’ health care coverage, she adds. The analysis also helps employees more efficiently spend their dollars, eliminating repetitive coverage and streamlining the consumer purchasing list, says Aaron Janssen, group benefits account executive with SilverStone.