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Filling Health Plan Holes

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Some employers are thinking about using hospital indemnity plans and other limited-benefit medical plans to fill in gaps in major medical coverage.

Major players in the worksite supplemental health market include units of companies such as Aflac Inc., Columbus, Ga.; Allstate Corp., Northbrook, Ill.; Assurant Inc., New York; and UnumProvident Corp., Chattanooga, Tenn.

“We feel like there’s a tremendous opportunity here,” says Matt Purrington, a UnumProvident supplemental insurance executive. “Most of the major players in the worksite market either have or are developing supplemental medical products.”

Rising co-payment levels, coinsurance rates and employee premium contributions are responsible for some of the gaps in insured workers’ coverage.

The average employee contribution for family coverage has increased to $226 per month this year, up from $129 in 1999, according to a paper released by the Henry J. Kaiser Family Foundation, Menlo Park, Calif.

Deductibles are also rising, and federal law requires sponsors of health savings account programs to set health insurance deductibles high.

Although major medical deductibles must be high, HSA holders also can own policies that pay lump-sum benefits or pay a flat amount for each day that the insured is in the hospital.

Colonial Life and Accident Insurance Company, Columbia, S.C., a unit of UnumProvident, is one example of a company that has designed a group hospital indemnity product specifically to complement HSAs.


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