Filling the Insurance Gap

The Wall Street Journal site posted a very interesting piece that explores the trend of employers offering “gap policies” to workers to help them cover unexpected out-of-pocket costs associated with their healthcare insurance.

For many workers, the WSJ notes, paying for healthcare has become “such a difficult budgeting exercise that the insurance industry is marketing additional products to help.” This gap insurance, also known as supplemental or voluntary insurance, is designed to provide extra coverage for things like hospital stays, unexpected accidents or treatment for acute illnesses such as cancer or heart disease. The policies are also designed to help cover the cost of high deductibles or copays for treatment—the gap that employees face before their health insurance kicks in.

“It is kind of like insurance on insurance,” says Brian Akian, a senior account executive with insurer Colonial Life, which provides gap insurance and is a unit of Unum Group.

The story goes on to detail how AmeriGas Propane Inc. recently began offering voluntary gap insurance to its 8,500 workers:

“Some people want more reassurance so they can put their head down and sleep well,” says Andy Rosa, director of human-resources and benefits at the propane-services company.

The piece goes on to lay out some of the different types of gap insurance on offer from the large insurers, including hospital-indemnity and critical-care insurance.

“It is growing like crazy,” says Shawn Jenkins, chief executive of Benefitfocus Inc., which provides benefit-administration technology to employers.

The whole piece is well-worth a read, especially considering that healthcare premiums show no signs of plateauing any time in the near future. Indeed, the WSJ piece notes that deductibles have grown 49 percent, on average, since 2011.