Supplemental policies may be business boon for insurers

To expand their business, many insurers now are selling supplemental health policies that fill gaps for consumers with employer-based coverage, reported the Kaiser Health News/Washington Post.

Aflac is one of the most well-known sellers of supplemental plans. MetLife, Nationwide, Allstate and Aetna each offer some form of supplemental policy, while an affiliate of Highmark Blue Cross is planning to sell such coverage soon.

Supplemental plans cost less and offer fewer benefits than traditional employer plans, but they cover services that aren't included in conventional policies, including paying consumers cash to cover their hospital stay or cancer-related care. The plans are highly tailored to specific medical conditions, a limited cancer plan, for example, won't cover services related to a heart attack.

"These supplemental health products have been recently--and we believe will be in the future--one of the fastest growing components of the employer benefits market," Todd Katz, an executive vice president with MetLife, told the newspapers.

Supplemental coverage is needed, insurers say, because employers are increasingly trying to lower their health-related costs by switching to high-deductible plans that often trim typical coverage. In fact, a Mercer survey found almost 66 percent of large employers and about 33 percent of small companies expect to offer high-deductible plans to their workers in the next three years, FierceHealthPayer previously reported.

What's more, some experts fear that since the plans aren't highly regulated like traditional policies, consumers could mistake them for coverage with more conventional benefits. That's why some experts want insurers to be required to clearly disclose that supplemental plans don't cover minimum health benefits prescribed under the healthcare reform law and don't satisfy the individual mandate requirement, the article noted.

Meanwhile, a January study found supplemental Medigap plans increase Medicare's costs by encouraging more unnecessary tests and procedures, FierceHealthPayer previously reported.

To learn more:
- read the Kaiser Health News/Washington Post article

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