If 2020 has taught us anything, it’s to take extra care when it comes to our health and wellness. Voluntary benefits are essential to ensuring your clients’ employees remain covered in case of the worst. As we look forward to the 12 months, how can you plan for both your success and the success of your clients?
Captive insurance programs offer a creative solution to insurance policies. What is the difference between standard market insurance programs and captive insurance programs? We’re here to breakdown the differences.
What is a captive insurance company?
A captive insurance company provides coverage to its owners. In other words, the insurance company is owned and controlled by its insured. When you invest in a captive insurance company, you see all the components of the premium and play a part in the pricing and delivery of the premium.
Among captive insurance companies are group captives. These are an insurance facility for unrelated participants who join together to share risk. You are able to control what you add and subtract to suit your specific situation.
So, what is the difference between standard market insurance programs and captive insurance programs?
In a traditional insurance program, the insurance carriers take on all risks and retain all profits. With captive insurance, the captive participants share in the risk for a potential reward of lower costs, underwriting profits, and investment incomes.
Captive insurance programs and traditional insurance programs are not mutually exclusive. In fact, a lot of traditional insurance companies work with captives to reimburse claims.
Why should you take the risk of a Captive Insurance policy?
Companies typically take the risk on Captive because the opportunity to capture the profits your fully-insured carrier typically takes in.
When you compare traditional and captive programs risk, the captive may appear to have more risk initially. However, Captives offer long-term solutions and control your risk over time. If you are unhappy with your current traditional health insurance program, consider whose interest your large insurance company is looking out for.
How exactly does Captive insurance protect you from catastrophic losses?
Captive programs include the protection of reinsurance/ stop-loss agreement that limits any catastrophic or aggregation of risk. The program’s reinsurance structure limits the participant’s maximum loss. In addition, this means the participant will never need to fund more than the premium and collateral.
Why do Captives require collateral?
Captives require collateral to ensure the funding of the captive assumed risk above the premium, net expenses. This ensures all potential losses are funded up front and participants are not required to contribute more money.
Captive insurance programs can be extremely beneficial to business owners. Employees will notice an increase in wellness, personalized guidance, and technology advancement that bridge the gap between healthcare and benefits. At SBMA, we can partner with other networks that may meet your employee needs better.
Navigating insurance policies can be challenging for anyone. There isn’t a way to predict the future, how can you know what you will need? There are so many options available, how can you decide? Voluntary benefits can help supplement insurance policies that may not cover all of your employee’s needs. There are multiple options when it comes to voluntary benefits with a few differences. What’s the difference between hospital indemnity policies and accident insurance? Here’s a breakdown.
Accident insurance is an option to help supplement out-of-pocket expenses for potential expenses incurred when an accident occurs. This insurance is used to cover expenses that your standard health insurance plan cannot cover. Typical medical insurance directly pays the medical provider, and you get the bill later. Accident insurance pays the cash directly to you and you are able to choose the best way to utilize that money.
What exactly does an accident insurance policy cover?
There are quite a few expenses accident insurance covers that your traditional health insurance plan may not. These can include emergency room visits, ambulance rides, helicopter transportation, hospital admission charges, diagnostic exams, follow-up treatments, ICU and rehabilitation unit care, and physical therapy. If you have ever had to be transported in an ambulance, you know how expensive that can be, therefore accident insurance could save you thousands of dollars.
Deductibles for many medical insurance plans can cost thousands of dollars, other insurance simply doesn’t cover hospital stays, ambulance rides, or other non-preventative care. Accident insurance can be a great back up plan.
What is hospital indemnity insurance?
Hospital indemnity insurance is very similar to accident insurance, whether you choose one over the other or, get both, will depend on your lifestyle, expenses, and savings. It is also used to supplement any expenses incurred outside of your health coverage.
Hospital indemnity insurance provides a set cash payment to use for any bills you need to pay. This is especially helpful for paying housing, bills, and living expenses if you are unable to work.
What does hospital indemnity insurance cover?
Hospital indemnity insurance coverage depends on the plan and coverage options you choose. Some things covered under a typical hospital indemnity plan include: ICU stays, critical care unit stays, outpatient surgery, continuous care, outpatient x-rays and laboratory procedures, outpatient diagnostic imaging procedures, ambulances, emergency rooms, and physician office visits.
Generally, hospital indemnity plans have lower premiums compared to other insurance, but depending on your coverage that can increase.
So, how do you decide which coverage to invest in?
The important distinction between the two types of insurance is how often you frequent the hospital. If you have hospital indemnity insurance and do not go to the hospital, you will not get paid benefits. However, accident insurance applies to both hospital stays and treatment from your primary care doctor. Consider a few things before you make your decisions.
Consider your lifestyle.
Do you enjoy running, hiking, and other activities that may be more prone to accidents? Accident insurance might be your best choice. Do you have kids who play sports or are constantly playing outside? Accident insurance may be for you. If you lead a relatively healthy, active lifestyle, accident insurance might be a better option for you.
If you have a chronic health issue or have dependents with chronic health issues, hospital indemnity insurance may be a better bet for you.
How much money do you need to get by?
If you live alone, or if you are a relatively young person with fewer financial responsibilities, accident insurance is a great option to ensure you are covered for whatever comes your way. Sometimes, the best solution may be to have both coverage options. If you have children, own a home, own a car, and have other expenses, purchasing both will give you the best coverage.
Lastly, consider how much money you have saved for emergencies.
If you don’t have a large amount of savings, e.g. enough to cover 3 months of expenses, a small monthly premium for accident insurance may sense for you. On the other hand, if you have enough money to cover potential accident expenses and support your lifestyle, but a large hospital bill might drain your savings, hospital indemnity insurance may be the better option.
There are quite a few things to consider as you decide what coverage may be best for you. At SBMA, we offer multiple voluntary benefit options to ensure you are prepared for whatever comes your way. Contact us to learn more about our employment policies and how you can ensure you are covered in case of an emergency.
Will My Insurance Cover the Cost of Coronavirus Testing?
As we continue to navigate through the effects of COVID-19, many questions arise when it comes to insurance coverage. Does your specific insurance cover testing? Does it cover treatment? How can I find out my coverage options?
The short answer is it depends on your coverage. Health insurance coverage varies widely, depending on where you live and how you obtain your coverage. Almost half of Americans receive their insurance coverage from their employers. Those plans are managed by both the federal and state guidelines, which depend on the group size and whether or not the plans are self-insured or fully-insured. So how does Coronavirus coverage fit into these health plans?
Let’s begin with testing. The Families First Coronavirus Response Act states the Medicare, Medicaid, and private health insurance plans are required to cover the cost of Coronavirus testing, without cost-sharing or pre-authorization requirements. This is including lab service costs and provider fees at doctor’s offices, urgent care clinics, and emergency rooms where tests are given. Because this act is federal law, self-insured and fully-insured plans apply to this rule. However, the testing coverage requirements that are imposed on some states are only applicable to fully-insured plans.
Plans that are not considered minimum essential coverage, for example short-term health plans, fixed indemnity plans, and healthcare sharing ministry plans, are not required to cover COVID-19 testing. Some of these plans do volunteer to cover COVID-19 testing, so look to your plan for specifics.
Some states, like Washington, have extended their testing coverage requirements to include these short-term plans, but most states have not imposed further requirements for these plans.
If you are uninsured, states can use their Medicaid programs to cover COVID-19 testing to cover their uninsured residents. There is $1 billion in federal funding to reimburse providers to cover COVID-19 testing for uninsured patients.
Now, let’s get into treatment coverage. As of right now, there is no specific treatment for COVID-19, most people will not need treatment, but around 20% of patients will be hospitalized, and 20% of those patients will need intensive care. This inpatient care is considered an essential health benefit for all ACA-compliant individual and small group health plans. Large group plans are technically not required to cover essential health benefits, but they are required to provide “substantial” coverage for inpatient care.
Even with coverage, inpatient care is expensive. The ACA states that all non-grandfathered/grandmothered plans must have in-network out-of-pocket maximums that can reach up to $8,150 for a single individual. Most COVID-19 treatment costs will not exceed this amount, but many health plans out-of-pocket limits are below that amount. Which leaves patients that need hospitalization with a four-figure invoice.
Some states, like New Mexico and Massachusetts have required state-regulated insurers to cover treatment and testing without cost-sharing. Minnesota is encouraging their providers to do the same.
Most states are both encouraging and requiring state-regulated providers to allow testing and treatment as in-network, whether or not the medical providers are in the plan’s network. Patients may still be subject to balance billing because out-of-network providers do not need to accept the payment as payment-in-full.
Here are some ways to ensure that you are protected during these uncertain times:
- If you are uninsured there is a COVID-19 special enrollment period in some states. If your state is included, an ACA-compliant plan is a great option. If you have a low income, you could also be eligible for Medicaid.
- If you currently have health insurance, understand what your plan covers, and how your cost-sharing responsibilities for in-patient and out-patient care may apply.
- Look at your health plan to see how it handles prior authorizations.
- Look at the details of your health plan’s provider network. If you see in-network providers you have a better chance of avoiding balance billing.
- Check to see if telehealth is covered, for less-severe cases, this is the best way to help prevent the spread of COVID-19. Some health plans are eliminating or reducing cost-sharing for telehealth services.
- If you have an HSA-qualified plan, you can devote your pre-tax money to your account for the year. The money you contribute to your plan is able to be withdrawn tax-free for out-of-pocket health care expenses.