Americans are surviving more serious illnesses and injuries than ever before – but can they survive them financially?

Employers today find it more challenging than ever to offer comprehensive health care coverage. Even with health care reform promising better coverage for more people, many group clients may continue to have major gaps in their medical coverage for deductibles and copayments – not to mention such non-medical expenses as experimental treatments, mortgage payments, and lost income, which health plans don’t typically cover.

Even more seriously, a study published this June by the American Cancer Society indicates that millions of cancer survivors have delayed medical care because they couldn’t afford it.

To help your group clients, you need new solutions that can fill these coverage gaps – and group critical illness and accident insurance plans may both offer significant help. These ancillary plans provide plan members and their families with financial benefits upon diagnosis of a major illness or accidental injury, and can help employers offer enhanced coverage at a minimal cost.

The other side of survival

We all know someone who has survived a critical illness or catastrophic accident, and lived a full life afterward. More than 34 million episodes of medically attended injuries are reported each year, according to the Centers for Disease Control and Prevention, and the American Heart Association and American Cancer Society estimate more than 25 million Americans will survive a heart attack, stroke, or cancer this year. Survival rates are high even among heart transplant patients: 88 percent of men and 77 percent of women survived at least one year past their heart transplant, and 70 percent of all transplant patients survived five years.

Yet one of the greatest challenges for these survivors is how they’ll endure financially. A well-known study published by the American Journal of Medicine found that 62 percent of all bankruptcies were caused by medical expenses; this number was up nearly 14 percent over a similar study conducted just four years earlier. More surprising is the finding that 75 percent of those who declared medical bankruptcy reported having health insurance. “Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy,” said the study’s lead author.

Medical bankruptcy may not be a surprising phenomenon, given the pharmaceutical regimens, experimental treatments, and various forms of therapy that are expensive with or without insurance. Still, as much as two-thirds of all costs related to serious illnesses are non-medical, including transportation to and from treatment, medically necessary renovations to a home, and family lodging or meals purchased during an individual’s stay at the hospital. All these expenses can contribute to a family’s financial distress while a primary wage earner recovers from illness or injury and regular family income is reduced.

How you can help

Critical illness and accident insurance can help alleviate financial stress for any expenses related to covered illnesses or injuries, through lump-sum cash benefits that can be used however the insured sees fit. These products make excellent supplements to group medical plans as they can be a low-cost solution for both employers and employees. While an average family medical insurance policy costs more than $13,000 per year, according to USA Today, an average critical illness insurance plan offering about $20,000 of coverage can add substantial value for just a few hundred dollars of premiums per year.

These ancillary plans can deliver significant benefit payments: Critical illness plans pay benefits for first-time occurrences and recurrence of covered critical illnesses, as well as additional benefits for additional occurrences of other serious illnesses. Accident plans pay multiple benefits upon diagnosis of specific injuries, hospitalization, or accidental death and dismemberment.

Even with health care reform, critical illness and accident insurance plans will likely become highly sought-after products, as they help fill gaps left by medical plans -especially out-of-pocket non-medical costs. In the end, the true benefit of critical illness and accident insurance plans is that they allow individuals and their families to focus on what matters most: a healthy recovery.

Erich Sternberg is president of Starmount Life Insurance Company and its sister company, AlwaysCare Benefits Inc. He can be reached at 888-729-5433.

How and When Do Employees Benefit from Critical Illness Insurance?

In the example below, an employee plan member purchases a $10,000 critical illness plan with cancer coverage and a wellness benefit.

Date of covered occurrence/event

Covered occurrence/event

Benefit type

Cash benefit paid

January 2011

Member suffers a heart attack

First occurrence

$10,000

December 2011

Member receives chest X-ray

Wellness benefit

$50

August 2012

Member suffers a second heart attack

Re-occurrence

$5,000

August 2013

Member receives routine colonoscopy

Wellness benefit

$50

September 2013

Member diagnosed with invasive cancer

Additional first occurrence

$10,000

Total benefits paid

$25,100