Does Your Health Plan Provide Adequate Catastrophic Coverage?

Catastrophic Coverage.BlogDoes your health plan provide adequate coverage for someone with a severe injury or medical condition? With health insurance costs on the rise, offering enhanced coverage may be difficult. But organizations need to know what their benefit plans cover and what modifications cost so they can make informed decisions.  

Recently, an MSEC member organization shared this story:

While jumping into a swimming pool, an employee sustained serious neck and spinal cord injuries. The employee needed extensive rehabilitative treatment. The member’s medical insurance had a 30-day limit on rehabilitative treatment, but the employee needed more than 30 days. The organization learned the typical length of rehabilitative treatment needed in these types of trauma cases is 60 to 90 days. 

Uncovered expenses become the employee’s responsibility at a time when he or she is also facing extreme health challenges personally or within the family. In this case, the member wished they had better understood the limits of their policy and typical treatment needs. 

More and more organizations offer High Deductible Health Plans (HDHP) to help hold down costs. The higher deductibles and out-of-pocket maximums on HDHP plans result in a lower monthly premium cost to the employer, but leave the employee paying more before the plan begins to pay benefits. However, HDHP plans can provide good coverage for catastrophic health claims once the deductible has been met, thus ensuring employees are not burdened by uncovered expenses.

What can an organization do to ensure its plan provides good catastrophic benefits?

Ask your carrier, insurance broker, or consultant to explain how your plan covers services used in catastrophic claim situations. These might include inpatient rehabilitation, durable medical equipment, outpatient therapy, or home health aide benefits. Take a close look at coverages that limit the number of days paid by the plan. 

Also, ask what drugs covered under your plan are for serious illnesses or injury. Do they fall into the “Specialty Drug” classification? Ask your carrier or broker to explain what your plan covers and what the coverage limits are. If a specific drug is ineffective for your employee, what alternative drugs does your plan pay for? What steps does your employee need to take to get them?

Fully insured plans with at least 50 employees will have more plan design options to select from. These plans must comply with state insurance requirements and typically copy the plan features of the state-approved plan quite closely. Ask to see prices for plans that cover catastrophic claims at different levels so you can compare costs. For example, look at costs on a plan that has a 30-day coverage limit compared to one with longer limits. The cost difference may not be as large as you think.

Employers with self-insured and partially self-insured plans can work with their broker or consultant to develop cost estimates for improving coverage where appropriate. Check with your claims processor and stop-loss insurer before making changes to ensure they can accommodate them. Also, ask if there would be any additional administrative costs because of the contemplated changes. 

Employers with small insured plans (those with fewer than 50 employees) have fewer plan design choices, but can still benefit from understanding what catastrophic events are covered and what options are available to improve coverage.

Supplemental coverage is another way to increase the benefit employees receive when faced with serious health situations. Critical illness, accident, hospital indemnity, and cancer coverage are examples of plans employers can offer to provide additional financial benefits for participants. They are generally offered on an employee-pay-all basis. These plans aren’t traditional health insurance, but pay a set dollar amount based on the situation’s specifics; for example, a set dollar amount per day in the hospital. The participant can use the money for whatever they wish, like paying the mortgage or their portion of the medical expenses. Contact your broker for names of insurers who offer these kinds of plans. 

Severe health conditions can change a person’s life forever. Adequate catastrophic coverage can help them return to being as independent and productive as possible while avoiding a severe financial burden.