Voluntary coverage plays important role in addressing employee critical illness needs
By Len Strazewski
COVID-19, the respiratory virus that created a global pandemic, is the disease that dominates everyone’s attention. But treatments and vaccines are on the way, medical experts say, and when they arrive, another illness may return to the forefront of everyone’s concern.
Cancer. In 2018, about 1.7 million cases of cancer of all sorts were diagnosed in the United States.
Though treatments and survival rates have been improving steadily, cancer in all of its many incarnations is still one of the most frightening diagnoses and one of the most expensive diseases to treat. Surgery, radiation, and chemotherapy have been joined by immunological treatments that are effective but expensive and, in many cases, debilitating.
Major medical insurance may pay for cancer treatments, but high- deductible health plans could leave thousands of dollars in deductibles and co-pays as well as ancillary expenses for transportation to and from treatments, lodging for family and other non-medical expenses.
Cancer insurance has been available for decades, but the early versions were narrow in scope and paid only inpatient claims and related costs, not relieving the ancillary expenses. But the modern versions of cancer insurance and its sister coverage, critical illness insurance, are broader in scope and have become popular voluntary supplementary options for employees, insurers say.
Alan Hirschberg, vice president of supplemental health products at MetLife in New York, says, “Coverage for cancer is an important part of a portfolio of voluntary benefits.” MetLife sells that protection mostly through critical illness insurance, which covers cancer and other illnesses but is not solely cancer coverage. And the need for covering cancer expenses and other critical illness expenses is well documented.
MetLife’s 18th Annual U.S. Employee Benefit Trends Study, released this past spring, polled 2,501 employee benefits decision makers and 2,650 employees in 2019, before the COVID-19 pandemic, and 2,367 employees in April 2020, after the pandemic began.
In a pre-COVID-19 survey, 23% of employees said cancer insurance was a “must have” benefit and 85% said the benefit was “must have” or “nice to have.” Critical illness insurance was a “must have” for about 32% of respondents and “must have” or “nice to have” for 89%.
Supplemental health benefits, even when they are not designed to pay for medical treatment, support the well-being of employees and their productivity, the study says. The need is particularly acute during the COVID-19 pandemic.
“The current pandemic is significantly impacting employees across their physical, financial, mental and social health,” the study says. “Benefits, perhaps now more than ever, play a pivotal role in supporting employees through times of crisis, helping them feel confident and secure in times of uncertainty and beyond. In particular, financial wellness benefits add a layer of protection to medical insurance and can ease the financial impact of the pandemic.”
Hirschberg agrees that a comprehensive roster of benefits including supplemental voluntary benefits plays a critical role in employee satisfaction, and employers are aware of employee needs and how they have increased with the introduction of high-deduct-ible health plans.
A portfolio of voluntary benefits, including cancer insurance and critical illness insurance, among others, allows employers to help their workers build a financial safety net, he says. Financial wellness benefits and benefit communication can be used by employers and their agents and brokers to craft a narrative that introduces the concept of a safety net and educates employees on the use of those benefits, he adds.
MetLife continues to add to supplemental health benefit products, and most recently the insurer has added new features to its critical illness coverage that address financial losses resulting from COVID-19 infections, he says. The coverage also now includes wellness features, including health screening, skin cancer screening and mammograms.
Aflac Second Vice President Wendy Herndon agrees that cancer insurance has evolved dramatically from a single lump-sum payment upon diagnosis with no benefit for reccurrence to a more complex coverage that provides benefits for “the journey of care” from diagnosis through treatment and recovery.
According to the 2019-2020 Aflac WorkForces Report, critical illness insurance ranked among employees as a top-five benefit in terms of popularity, behind major medical health insurance, dental, vision and life insurance.
Employers, Herndon says, are adding cancer and critical illness benefits to their supplemental portfolios and communicating them as a value for employees and their families who recognize the need for financial security. “Employers do want to take care of their employees; they may not be able to cover everyone for every eventuality, but they can provide options for employees to consider,” she says.
“The cancer coverage now provides benefits through all stages of treatment and ongoing support—not just a one-time lump sum,” she says. The policy pays for diagnosis, treatment and continued monitoring such as MRIs and other examinations while a patient is technically in remission.
The emphasis is on financial security, she says, and more than any other disease, cancer creates a continuing drain on financial resources as costs exceed major medical health insurance limits. Aflac’s coverage provides a holistic approach to treating and managing the disease.
“It’s hard to find someone who does not know a person who has been diagnosed with cancer,” Herndon says. And treatment and testing have expanded, creating additional expenses that may or may not be covered by health insurance, in whole or in part.
Aflac’s website says health insurance pays an average of only about 60% of cancer expenses. Supplemental health insurance, available as a package of cancer insurance, hospital indemnity insurance and short-term disability, may cover another 10% of total costs.
Among the reasons for the increasing costs is new technology for diagnosis and treatment. Genetic testing may identify a propensity for some forms of cancer and identify effective treatments. Immunologic treatments, for example, are a new and expensive set of options that use a patient’s own immune system to treat and, in some cases, kill cancer cells, but it may not be covered completely by health insurance.
Cancer insurance itself is not a fast-growing product. In fact, as Janet Buzil points out, LIMRA statistics show that cancer insurance sales actually declined about 5.4% last year, while critical illness insurance sales increased 15.8%. “Critical illness insurance better reflects an increasing understanding of employee needs,” says the vice president of marketing and product development at Chubb Workplace Benefits in Chicago.
Critical illness insurance, which can cover 10 or more additional serious illnesses, “has really become a standard voluntary benefit,” she adds. “It has found its path,” particularly as employers increasingly move to high- deductible health plans, introducing potentially new financial challenges for employees and their families.
“Critical illness insurance, together with other supplemental health benefits, can help employees cope with increased deductibles and coinsurance under their employer-paid plans,” Buzil explains. “It can enhance the underlying medical plan and encourage financial wellness by covering out-of-pocket costs for travel and other expenses, so employees and their families can worry less about money and focus on recovery.”
Cancer insurance and critical illness insurance benefits keep increasing as medical science generates more sophisticated treatment. For cancer, stem cell treatment, immunological treatment, and other new approaches are working their way into the standard of care. For heart disease, included are aortic valve repair and replacement, angioplasty, preventive stents, and pacemakers. Coverage for COVID-19 screenings and telemed office visits also is finding its way into some supplemental products.
Chubb recently introduced a cancer benefit enhancement package that provides monthly benefits for cancer treatment, such as bone marrow and stem cell transplants, surgery, chemotherapy, hormonal therapy, and radiation therapy. “We also provide employers the option to offer full face amount benefits for breast cancer, even when diagnosed as carcinoma in situ,” Buzil adds, “as its lifelong implications go well beyond surgery and treatment.”
Before the pandemic, diabetes commanded considerable attention and insurers were looking to bring more preventive care benefits to the table. “Diabetes continues to be a serious health concern,” Buzil notes. To address it, Chubb introduced diabetes diagnosis and care benefits, which provide money for enrollment in smoking cessation, nutrition counseling, and fitness programs to help employees manage their diabetes, change their behavior, and promote recovery and wellness.
Telling the story
Communication is critical to marketing cancer insurance, insurers say. Aflac, for example, provides flyers, videos and a website that highlights costs that can be used by employers directly or agents and brokers as they meet with employees during open enrollment.
“Agents and brokers play a big role in crafting the story that educates employees about their own needs and how those needs can be met with supplemental health benefits,” MetLife’s Hirschberg says.
For more information:
Chubb Workplace Benefits
Len Strazewski is a Chicago-based writer, editor and educator specializing in marketing, management and technology topics. In addition to contributing to Rough Notes, he has written on insurance for Business Insurance, Risk & Insurance, the Chicago Tribune and Human Resource Executive, among other publications.