As critics and supporters of Obamacare anxiously await the implementation of a new health insurance marketplace, little is know for sure about it’s overall effect on the costs associated with an illness or injury. Supporters assure us that the Affordable Care Act will result in lower health insurance premiums and deductibles. Critics are quick to refute that and point to additional costs imposed on insurance companies to provide more coverage, deal with new taxes on pharmaceuticals, and the possibility of anti-selection driving up claims. Whatever the outcome, when an American gets sick or injured, there are expenses, not covered by any health insurance plan, that can cause financial disaster.
A recent Harvard University study sited that over 60% of U.S. bankruptcies were due, at least in part, to the indirect costs associated with an illness or accident. This includes items such as loss of income to one or more family members, household bills, travel costs to seek treatment, and other household expenses. Health insurance plans were never designed to cover these expenses. Since 76% of Americans live paycheck to paycheck, many are forced to borrow from friends or family, try to get a second mortgage, sell assets, or simply default on their obligations.
The insurance community has responded with supplemental insurance plans that provide cash benefits directly to families regardless of how much their health insurance may be paying physicians and hospitals. There are expanded options for disability insurance and some carriers even offer guaranteed issue for employees who have a history of illness. American workers aren’t the only ones concerned about healthcare costs. In a recent Workforce Study by Aflac, almost 40% of employers say controlling medical costs is a top issue and that more than half of the country’s employers are giving employees the choice of purchasing supplemental benefits such as short-term disability, accident, critical illness, dental and life plans.
It may take some time to determine the success or failure of healthcare reform. In the meantime, supplemental benefits will continue to gain popularity as a solution to the need for cash.