Cooperating for better care.

Karen Pollitz

Tag Archives

Some employers paying lump sums for employees’ care episodes


for Kaiser Health News

Insurance policies that pay a lump sum if workers get cancer or another serious illness are being offered in growing numbers by employers. Companies say they want to help protect their workers against the financial pain of increasingly high deductibles and other out-of-pocket costs. But it’s important to understand the limitations of these plans before buying.

Critical-illness plans have been around for decades, but they have become more common lately as employers have shifted more health care costs onto their workers’ shoulders.

Forty-five percent of employers with 500 or more workers offered the plans last year, up from 34 percent in 2009, according to benefits consultant Mercer. Employees are generally responsible for the cost of coverage, although in some cases bosses contribute to the premiums.

“What we have seen is a very clear and steady rise in the number of employers offering high-deductible plans,” said Barry Schilmeister, a principal in the health and benefits practice at Mercer. “More employers are looking at the reality of pulling back on the value of health plans but looking to offer something else that would make people feel a little more comfortable about taking on that additional risk.”

Forty-six percent of workers covered by insurance on the job faced a deductible of at least $1,000 in 2015, up from 22 percent in 2009, according to the Kaiser Family Foundation’sannual survey of employer sponsored coverage. (KHN is an editorially independent program of the foundation.)

Critical-illness policies typically provide a lump sum if someone is diagnosed with cancer, heart attack, stroke, kidney failure or needs a major organ transplant. They may also pay benefits for other medical problems such as loss of vision or paralysis; plans have an average of 19 eligibility triggers, according to a market survey by Gen Re, a company that offers insurance to insurers to help manage the risk from underwritten policies. In addition, some employers also offer a policy that pays only in the event of a cancer diagnosis.

Nine out of 10 critical-illness policies are sold through the workplace, according to Gen Re. These plans provide an average $15,000 payout to workers diagnosed with one of the conditions covered under the policy. Plans sold on the individual market pay $31,000 on average, Gen Re said, but applicants generally have to go through medical underwriting to qualify. Employer plans usually don’t require that.

The average annual premium was $283 for $25,000 worth of coverage in 2013, according to financial-services research company LIMRA.

In addition to deductibles and cost-sharing for pricey drugs and treatment, the payments can be used to help cover many expenses associated with serious illness that even generous employer health plans don’t cover, including travel costs to see a specialist, time off from work and extra charges for out-of-network doctors or hospitals.

But benefits from the critical-illness policies can be limited by very specific requirements, so it’s important to understand the coverage before you buy. Here are some of the details to look for:

Pre-Existing Conditions

If you’ve had cancer or a heart attack in the past, check to see whether the plan will cover those conditions in your case or impose a waiting period before doing so.

Excluded Benefits

“Understand that maybe not every cancer and heart attack is covered,” said Stephen Rowley, vice president at Gen Re. For example, non-invasive prostate or breast cancers may be excluded from some policies. However, a growing number of critical illness insurers are covering such early-stage cancers, said Karen Terry, assistant managing director for insurance research at LIMRA.

Partial Payouts

Rather than excluding coverage altogether, plans may make a partial payout for things like non-invasive cancer, heart-bypass surgery or angioplasty.

One-Time vs. Repeat Payouts

If you get cancer a second time, will the plan pay out again, in full or in part? Does it matter if the second incidence is the same or a different type of cancer?

Unrestricted vs. Specified Schedule Of Benefits

Critical illness policies typically pay out a lump sum to use as the policyholder wishes. Cancer policies may do the same or pay set amounts for hospitalization, chemotherapy or radiation treatments, for example.

Age-Related Benefit Reductions

Some plans reduce how much they pay out after policyholders turn 65 or 70.

Waiting Periods

Plans typically won’t pay benefits for 30 to 90 days after a policy becomes effective.

As people’s financial exposure for medical care has increased, “they’re really spooked, especially when they’ve had a serious illness in their family, and they know all that goes along with that,” said Bonnie Burns, a longtime consumer-health advocate and a policy specialist with California Health Advocates, which assists Medicare beneficiaries. “I think these [coverage] holes are going to proliferate and people are going to fill them where they can.”

However, some researchers suggest that the increasing interest in critical-illness policies does not compensate for less generous health insurance policies. “Why don’t they just offer people a better [health insurance] policy in the first place?” said Karen Pollitz, a research fellow at the Kaiser Family Foundation.


Shopping for low-priced CT scan in vain



3D reconstruction of the brain and eyes from CT scanned DICOM images

By JAY HANCOCK, for Kaiser Health News

Douglas White knew high-deductible insurance is supposed to make patients feel the pain of medical prices and turn them into smart shoppers. So he shopped.

He called around for price quotes on the CT scan his doctor ordered. After all, his plan’s $2,000 deductible meant paying the full cost out of pocket. Using information from his insurer, he found a good deal — $473.53 at Coolidge Corner Imaging in Boston, a half hour from his house.

But the bill he got later was for $1,273.02 — more than twice as much — from a hospital he had no idea was connected to the imaging center.

“I was shocked,” said White, a doctor of physical therapy who thought he knew his way around the medical system. “If I get tripped up, the average consumer doesn’t have the slightest chance of effectively managing their health expenses.”

A national study by Consumers Union basically comes to the same conclusion, suggesting that there are millions of Douglas Whites lost in the medical billing maze.

Nearly one in three Americans with private health insurance surveyed by the research group got a surprise medical bill in the past two years — defined as when a plan paid less than expected and doctors and hospitals tried to recover the balance from the patient.

Of those with surprise bills, nearly a fourth got bills from doctors they had no idea were involved in their care and nearly two-thirds were charged more than they expected.

“When we talk about transparent healthcare and the need for consumers to shop around, it’s just not possible in many situations,” said Blake Hutson, a senior associate for Consumers Union, the policy arm of Consumer Reports. “Even if you work for a big company and have what you think is a good health insurance plan, you can get a surprise medical bill.”

The deductible is what patients pay before insurance kicks in. The higher the deductible, the more you pay out of pocket. Deductibles of $3,000 or $5,000 are not unusual these days, although the health law caps out-of-pocket costs at $6,600 for individuals and $13,200 for families.

Making plan members pay more in this way is supposed to prompt them to check prices and put competitive pressure on medical providers.

The problem is that you can’t buy medical services the way you buy a phone plan. Doctors, hospitals and other providers generally don’t advertise their prices and often keep them confidential, even when asked by patients about what to expect. Providers charge different amounts for the same service depending on the insurance.

One episode of treatment can generate bills from multiple caregivers, especially in the hospital.

A new study by the Employee Benefit Research Institute shows that members of high-deductible plans have higher incomes and are more educated on average than the typical American. But a post-grad degree from MIT might not be enough to figure out some bills.

The system is so complicated that one patient in three who got a surprise bill in the Consumers Union study didn’t investigate or fight it.

“I didn’t think it would make a difference,” or “I was confused about what to do” were common reasons for inaction.

That’s the wrong response, said Karen Pollitz, a senior fellow at the Kaiser Family Foundation who studies how the health system affects consumers. (Kaiser Health News is an editorially independent project of the foundation.)

“It’s always advisable to ask questions if you receive a surprise bill or if insurance pays less than you expect,” she said. “Mistakes happen and following up can save you money. If it gets too confusing or frustrating, ask for help.”

Consumers Union offers an online tool for finding the relevant agency in your state and its contact information.

White’s billing problems were cleared up — many months and phone calls later and after a reporter started inquiring.

His plan, Harvard Pilgrim Healthcare, said it had given him an incorrect quote for the CT scan last fall. The plan eventually paid the imaging center the full $1,273, saying it wasn’t White’s fault that the plan’s quote was wrong.

The bill had come from Brigham and Women’s Hospital, which owned the radiology center, even though White said there was no indication of that when he went to get the scan.

Harvard Pilgrim said it didn’t know Brigham and Women’s was affiliated with the center, either. Hospital-owned facilities are often far more expensive than independently owned doctors’ offices.

So how does he like the transparency revolution in healthcare, boosting competition and empowering patients?

“There is nothing transparent about most healthcare billing,” White said.

Contact Info

(617) 230-4965

Wellesley, Mass