Demand for Voluntary Fixed Indemnity Medical Insurance Is Rapidly Expanding, According to a New Study
2020-2021 will go down in history as the 18 months that rocked the employer-sponsored benefit world as employers realized that governmental compliance with the ACA mandates is not enough.
A key HR paradigm shift is emerging today, moving from a focus on employee “wellness,” to a focus on employee “well-being.” Well-being encompasses more than physical health, but also includes emotional and mental health. The virus changed employees’ attitudes significantly, and they now expect their employers to fulfill needs for security, a key aspect of emotional and mental well-being. MetLife’s annual Benefits Trends Study showed that 80% of employees now believe employers are responsible for their health and well-being. With gaping holes in coverage under ACA-compliant plans, voluntary, supplemental Fixed Indemnity medical and ancillary plans have become a necessary part of the solution for employers in the small and medium-sized employers (SME) business sector.
Willis Towers Watson (WTW), in a key survey, found that employees’ post-pandemic sense of security came MORE from their insurance benefits and less from actual money in the bank. WTW’s expectation was that enrollments in insurance plans would go down, in favor of putting money in savings and checking accounts, but they found the opposite to be true. According to the survey, 94% of employers, who responded now expect voluntary benefits to “hold great importance” over the next 3 years. That’s a pretty astounding indicator of a major shift in employers’ attitudes about their responsibilities toward employees.
Voluntary, Supplemental Fixed Indemnity Medical Insurance helps pay for hospitalization and critical care that is top-of-mind for employees in a post-pandemic world. In fact, 65% of employers plan to offer hospitalization indemnity by 2022, and more than 75% plan to offer critical care indemnity, up from 42% and 57% respectively, according to the same WTW survey. This demonstrates that employees and employers are finding real value in this type of insurance, emerging from this unprecedented world healthcare event.
But the Brookings Institute appeared to take an opposite view in August 2020 with an article entitled “Fixed Indemnity is a Problematic Form of Junk Insurance.” But even in this article, which applied a sweepingly false label to an entire class of insurance, the issue was not about the true value of Fixed Indemnity, but an argument against charlatans who are using deceptive marketing tactics to masquerade it as Major Medical Insurance. The Brookings Institute, however, does make an important point for employers —buyer beware. The providers’ reputation and longevity in the industry matters as a starting point to fend off those with too-good-to-be-true schemes. Nothing can be worse for employees who want the security provided by a Fixed Indemnity Plan than to discover they have been duped in some way. Employers need not just offer Fixed Indemnity Insurance, but vet it as well. For a more complete review of the Brookings Institute findings, go to The Truth About Fixed Indemnity Insurance: A Must Read for Employers.
A key takeaway for employers is to choose the right Fixed Indemnity Insurance Plan, which if properly designed should cover a large portion of everyday medical expenses as a supplement to any Major Medical Plan. Employers also must clearly communicate that Fixed Indemnity is not a substitute for Major Medical Insurance.
Voluntary Fixed Indemnity Insurance can also be paired with a relatively new benefit that is widely seen as critical in the post-pandemic environment — next generation telemedicine, and more specifically, virtual primary care. This is especially important in the mental health field where there are acute problems with access to care as 67% of the population say they have suffered from mental anxiety over the past year. Virtual primary care has been growing and is especially valuable for those with chronic conditions that may limit their access to bricks and mortar doctors’ offices. Harvard Business Review calls virtual mental healthcare a lifeline in light of the increased anxiety due to social isolation and new work-from-home business strategies that are expected to continue. A good voluntary plan should include treatment for mental and emotional problems that have sky-rocketed due to the pandemic.
In summary, employers should be well-advised that in today’s market those who ONLY offer a bare minimum ACA-compliant plan will be at a severe competitive disadvantage, especially in certain lower-wage industries. Employers are now, more than ever, expected to address the total “well-being” of their employees, and the right Fixed Indemnity Medical and Ancillary plans provide the solution for small and medium enterprise (SME) employers. But employers should also be aware that not all Fixed Indemnity insurance is created equal, neither in plan design nor administration. (For more on this topic go to: “SME Employers: 3 Key Factors to Consider When Building Your Benefits’ Strategy.”)
Finally, as more and more employers plan to add important voluntary, supplemental Fixed Indemnity Medical Insurance coverage just to catch up to new employee expectations, virtual primary care should also be a major consideration in their benefits’ strategy in order to keep pace with new trends in the delivery of healthcare that, no doubt, will become entrenched.