During the past 30 years, employers have watched as the cost of their health care plans have grown enormously. The seemingly never-ending cost spikes have left employers struggling to find ways to make their plan's cost more manageable.

Some employers have begun to add high-deductible health plans, which lower benefit maximums and raise the employee's coinsurance levels and deductibles, in an effort to achieve a more manageable plan cost. However, high-deductible plans can result in employees seeing their range of coverage diminish to the point that they would need some sort of supplemental medical coverage to meet their needs. Employers can help meet such supplemental needs by offering supplemental medical plans on a voluntary basis.

A report by Eastbridge Consulting Group, a marketing advisory firm for organizations that offer financial and insurance services, found that supplemental medical products and voluntary indemnity new sales have substantially grown in the last few years. The recent interest in supplemental medical plans may be attributed to the recent changes in workplace medical coverage offerings, such as described above, that many employers have deemed necessary to make their plan's cost more manageable.


The cost of offering supplemental medical plans is relatively insignificant for the sponsoring employer. Supplemental medical plans, like all voluntary insurance products, are paid in full by the employee participating in the plan. Participating employees can pay for their selected coverage at a group rate and may even get to pay for it using pretax dollars through a section 125 plan. The employer's responsibilities are usually limited to adding payroll deduction slots and a minimal amount of administrative costs.

Employers should keep in mind that there are innumerable supplemental medical plan types in today's market. Specific products being offered by various carriers may be very similar, but be marketed under a different name. Also keep in mind that the specific benefits offered under similar competing products might vary.

Hospital Intensive Care insurance and Hospital Indemnity insurance both act as supplements to an employee's primary medical plan in the event intensive care hospitalization or hospitalization is necessary. The benefit, depending on the policy, can be paid only for specified procedures or as a set amount that's paid per day.

Critical Illness, Dread Disease, and Health Event insurance each provide a benefit upon the occurrence of a policy-specified event or diagnosis, such as stroke, heart attack, or organ transplant. The employee or his/her survivors can use the provided benefit at their own discretion. The beneficiary might choose to use the money for treatments classified as experimental or that are otherwise not covered under their primary insurance, pay for daily living expenses, and so forth.

Specified Disease insurance provides coverage beyond the employee's primary medical plan, but only for a specific disease. For example, Cancer insurance could provide an additional benefit for things like surgeries, radiation treatments, and chemotherapy. This type of policy might also provide a benefit to cover the incurred costs of travel and lodging when going to and from a treatment or pay a benefit upon the diagnosis of the specified disease.

Catastrophic Medical insurance is a type of supplemental insurance that takes effect once the primary medical plan benefits are exhausted. Some of these plans are designed so that costs paid by both the primary plan and the employee will count toward the deductible. This is generally an important feature since the deductibles for this coverage are typically high.

In closing, employers looking to add supplemental plans to their offerings should look very carefully at the details of coverage, not just the, sometimes misleading, policy names. A good example is Cancer insurance. Does the policy cover one type or all forms of cancer? Does it only cover a few treatment options or a range of current options? Examining the details will be vital in determining if a policy works well with your other medical offerings, doesn't duplicate your medical offerings, and provides your employees with the best value for their health dollars.

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