Insurers Push Policies For Coverage Gaps

By Christopher Snowbeck
Star Tribune (Minneapolis).

MINNEAPOLIS

Call it insurance for your health insurance. As deductibles get bigger, insurers are pushing extra coverage that can help people with certain serious health problems cover out-of-pocket costs.

These “critical illness” policies have been around for years, but UnitedHealthcare and Securian Financial Group, both based in the Twin Cities area, are among the insurers making recent moves in the growing market.

The coverage pays a lump sum of cash if a policyholder is diagnosed with cancer, stroke or one of several specified illnesses.

More employers are offering the coverage, with workers typically paying the full premium cost.

“As health care costs have risen, more and more employers have been going to high deductible plans,” said Gary Harger, vice president of voluntary products with UnitedHealthcare. “As they go to high deductible plans, that does leave a gap where now there’s more annual out-of-pocket (costs) for a consumer.”

Some see trouble in those trends for consumers.

Administrative costs with what used to be called “dread disease” policies tend to be high, with a relatively small share of the premium dollar being paid out in benefits to consumers, said Timothy Jost, an emeritus law professor at Washington & Lee University.

“They’re not a very high-value product to consumers, and are probably a much higher-value product to the people who are selling them,” said Jost, who advises the National Association of Insurance Commissioners on consumer issues. “They’re profitable for insurers, and profitable for insurance agents and brokers.”

About 81 percent of workers in employer-sponsored health plans faced a general annual deductible last year, according to a survey from the Kaiser Family Foundation.
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The average deductible for single coverage at the time was $1,318, 40 percent higher than during 2010, the foundation reported in September.

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