It’s often pitched as an insurance policy for your health insurance policy.
The product, known as critical illness insurance, promises to pay a lump sum, anywhere from $5,000 to $100,000, after someone receives some sort of dreaded diagnosis, like cancer, a heart attack or a stroke. And the coverage is not terribly expensive; if you are in your 40s, it might cost $25 to $50 a month.
These policies have become increasingly popular, partly because they are being marketed as a way to provide another layer of financial support now that consumers are shouldering an ever-rising share of medical expenses out of pocket.
More employers are offering these policies alongside their high-deductible health plans as well, as way to ease financial anxiety. It’s akin to putting a Band-Aid on the less generous medical coverage — or perhaps a way to nudge employees into feeling more comfortable with a high-deductible policy.
“Quite honestly, these high-deductible plans are a source of initial employee stress,” said Barry Schilmeister, a principal in the health and benefits business at Mercer, a human resources consulting firm. “And it seems as though these plans are helping a certain group of employees feel a little bit better about signing up for a plan that has a high deductible, at least in certain cases where the employee is afraid they will have a large out-of-pocket cost in those kinds of not-frequent situations.”
“Deductibles are rising. More people are getting out-of-network bills,” said Jackson Williams, director of government affairs at Dialysis Patient Citizens, who has studied the policies in his role as a consumer representative for the National Association of Insurance Commissioners. “What concerns me is that these products are being marketed as being helpful to people’s personal finances in the event they have some sort of illness and need to pay their outsized deductible. But I would vehemently disagree that these products are very good at addressing that problem.”
Mercer found that nearly 60 percent of large employers offer some type of high-deductible plan — often referred to with the euphemistic name “consumer directed health plan” — and about one out of every four covered employees is enrolled in one.