Hospital Indemnity Insurance
Why Employers Need to Offer Hospital Indemnity Coverage:
In an environment in which the labor force is shrinking and becoming more diverse, employers need a well-rounded benefit package to attract and retain top talent, and stay competitive.
Hospital indemnity policies are generally pre-tax eligible when offered voluntarily to employees. Employers receive both the good will associated with a more comprehensive benefit package and tax saving from employee deductions.
Americans are not prepared financially for the loss of income from a hospital stay. Employers need to ensure workers are able to return to work without outside distractions caused by financial hardship.
Most medical plans now have deductibles and coinsurance for which employees are responsible. Employees are generally hit hardest with cost sharing when hospitalized.
Why Employees Need Hospital Indemnity Coverage:
When treatment for an illness or injury requires hospitalization, out-of-pocket expenses often pile up both at the hospital and at home.
Providing inpatient care for an injury or illness almost always requires paying out-of-pocket expenses for things such as deductibles, co-pays, coinsurance, travel, childcare and home care.
As medical costs escalate and major medical plans continue to increase cost sharing to employees, supplemental insurance becomes more important to maintain an adequate level of protection.
FUNDING OPTIONS
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100% Employer Paid-This is generally handled through a benefit bank. The employer provides an amount equal to the premium for the employee to purchase the policy. With pre-tax deductions the dollars spend further for the employee and avoid FICA taxes for the employer.
100% Employee Paid-Hospital indemnity policies can be offered at no cost to employers with generally very low participation requirements. Every dollar spent pre-tax will create savings for the employer.
Partial Employer Paid-An employer may also fund a flat dollar amount to a benefit bank. An employee can offset their premium cost or choose between multiple benefit options to apply the benefit bank dollars.
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