Welcome to ThreeFlow's benefit breakdown series, where we dive into the details of a coverage and discuss the most recent trends with the help of ThreeFlow's data and benefits experts.
We talked with underwriting consultant Jessica Imlay to help us break down worksite insurance. With almost ten years of insurance experience, she's well-versed in the nuances of worksite insurance.
What is worksite insurance?
Worksite insurance was born as a response to the rising costs of medical bills for employees. It can be a great supplement to high-deductible medical plans as they help employees offset the cost of major medical expenses. These benefits are typically employee-paid.
The most common options for worksite benefits are accident, hospital indemnity, and critical illness. Employers can choose to offer just one of these coverages or stack them, depending on the needs of their employees.
Accident coverage helps with low-severity, high-frequency medical events, such as a broken leg from a car accident. Employers can offer one or two types: 24-hour, also known as occupational coverage, and nonoccupational coverage.
Hospital indemnity coverage helps pay for expenses associated with hospital stays. A carrier may provide either a hospital admission benefit, ICU admission benefit, or both.
Critical illness coverage covers high-severity, low-frequency medical events, like heart attacks or cancer diagnoses. It's a lump-sum policy that pays out when you experience that specific medical event.
What should be considered when choosing accident coverage?
It's essential to think about which coverage type will be best for the employee and their industry. Occupational coverage provides benefits regardless of whether an accident occurs at the insured's workplace or off the job. Nonoccupational coverage only covers accidents outside the workplace.
Brokers prefer occupational coverage on most groups because it's more comprehensive and easy to market. However, most carriers draw a hard line on offering this coverage to some higher-risk industries.
It's also important to consider pricing and enrollment figures. For example, occupational coverage can be significantly more expensive, and if the group is a lower-earning industry, it’s unlikely enough employees will enroll. This will impact participation, and if it’s not high enough, carriers will ultimately choose not to offer coverage.
What should be considered when choosing to offer hospital indemnity coverage?
Hospital indemnity benefits can be costly, so brokers should help the employer understand the combined cost of the employee’s medical and hospital indemnity premiums to determine if it will be worth the price.
And since this product is participation-based, the carrier may either increase rates or cancel the coverage if enrollment numbers are below a certain threshold.
What should be considered when choosing to offer critical illness coverage?
Critical illness coverage can make a massive difference to an employee who experiences a covered condition because these benefits can cover any expenses, including medical bills, groceries, or rent.
The lifetime benefit maximum for this policy varies between carriers, but we're starting to see the market shift towards unlimited. Currently, 44% of employer groups with benefits placed through ThreeFlow have an unlimited lifetime max. While it’s a great marketing tool, an insured may never claim enough coverage for this benefit to be worth the increased price.
If an employer does need an unlimited lifetime max, it's always beneficial to provide claims experience, plus a census with date of birth. However, carriers may be conservative if there are poor claims experience or an aging population.
Because most worksite benefits are employee-paid plans, it's beneficial for employers and brokers to think about realistic usage percentages and the total cost for the employee.
While it can be a balancing act, many choose to aim for a middle-of-the-road plan that covers the most common injuries and illnesses but is not so benefit-rich that it prices out most employees, causing enrollment percentages to drop and premiums to rise.
Want to learn more about ThreeFlow's underwriting consulting capabilities? Request a demo today. And stay tuned for more of our Benefit Breakdown series, where we'll dive into a particular line of coverage and discuss what ThreeFlow's data shows on trends.