How One Benefits Consultant Realized the Importance of Having Cancer Insurance First-Hand
Jun 1, 2012
Hey, can you keep a secret? During the last number of years I have sold my clients’ cancer / dread disease insurance. For years as an employee benefit consultant, I looked down my nose at cancer insurance. All for the usual reasons held by many consultants and medical plan producers. It is a “bad buy”; it only pays 10% to 20% of premiums in claims; the benefits are duplications of what the medical plan covers; or they coordinate against medical insurance payments. I said as much to the HR VP at an 87,000 employee client looking at cancer policies as an optional benefit for their employees.
I WAS WRONG! And I was about to get my education. My 14-year-old son was diagnosed with terminal cancer. The alphabet house benefit consulting firm I worked for did what many companies then did, and most do today thanks to THE FAMILY LEAVE ACT. They told me to take off all the time I needed; take care of my son; my job would be here when I got back; and oh, we can’t pay you while you are not at work. Guess I would use short term disability. Answer, nope, you don’t have cancer, your child does, or your spouse does. You don’t qualify for disability payments. And THAT is when the light bulb came on.
The group medical plan did exactly what it was designed to do: 1) Pay the doctors 2) pay the hospital and 3) pay the pharmacy. But not one dime went to the family. I discovered that the reason for and design of this type of employee benefit is to provide income replacement for the family during a period that often results in reduced or no income. And as good as any medical plan is there are always deductibles, co-insurance and other out-of-pocket expenses. Things like $1,100 parking at Children’s Medical Center and $23,000 immunotherapy treatments not covered by the medical plan. And this is the short version.
In the process of going through my son’s battle I learned some important things. I didn’t really know what I thought I knew about the need for catastrophic illness policies. I didn’t know there are affordable policies with reasonable loss ratios. The percentage of claims paid to premiums actually is similar to any individual major medical or disability policy. And I always considered those to be necessary and reasonably priced.
I didn’t know that these policies provide dollars to cover expenses which are additional and the expenses every family has every month. Your house payment, property insurance, car payment, vehicle maintenance; groceries; travel and lodging, and even experimental treatment not covered by the medical plan. And I now know that everyone feels bad for you, but every provider still wants their payment.
And the reality is that there are decent products available out there, underwritten by quality carriers, that can be marketed in an up front and honest way. We explain to the employee the why and how of our policy because many of them have the same opinion of cancer insurance that I used to have. And we explain the how because yes, there are still some policies out there of lesser value. The employer and employee deserve to have coverage that will truly answer their needs and concerns. Education of the broker, the employer and the employee is the key to our plan designs’ success.
The good news is that more and more people today are surviving cancer treatment to live long lives. The bad news is they may not survive the bills and resulting financial devastation. I felt I was well-covered, in a good situation and very financially stable. Nine months with no paycheck and a significant increase in unexpected bills can take you to your knees, and cripple those who aren’t financially prepared.
In addition, we talk about all the research and new treatment discoveries being made. These new ideas are proven in trial programs at specific research hospitals and only available at these facilities, often 1,000 miles away. During my son’s treatment the doctor wanted to use immunotherapy, which was not covered under my medical plan. You think I was going to say no because it was not covered? That is where some of my 401(k) money went. If I have cancer, I am going to want to go where I have the best chance of survival. I am going to want the cutting edge care. That could be a challenge if I am in a plan with a HMO or PPO and that facility is not within the plan. We pride ourselves in providing our clients with the ability to take charge of their own treatment and the decisions that affect their well-being.
One benefit of our plan design is that the plan is qualified for Section 125 pre-tax treatment, saving taxes for the employee and employer. The broker must be careful, as not all product designs qualify for pre-tax status.
And when your light bulb goes on, be aware that not all benefits within a policy are equal. A quality policy will be guaranteed renewable with no lifetime maximum of benefits. Chemotherapy is a poison itself; patients are susceptible in the future. So I hate lifetime maximums.
It has been determined that radiation, chemotherapy and immunotherapy are the most reliable methods of destroying cancer cells. The result is that these procedures can be the major charge in the medical bill. So it stands to reason to have these major benefits in the policy accompanied with the fewest restrictions. Other appealing pieces of policy design would be reconstructive surgery, experimental treatment, colony stimulating factors and the inclusion of ICU and CCU benefits. And even more appealing for your client would be the inclusion of coverage for many other dread diseases such as MS, Lupus, Cystic Fibrosis, many of which are treated in the same manner as cancer.
The bottom line is that employees want this coverage. It has the highest voluntary participation of any benefit product we communicate. It has by far the highest persistency during employment and the highest retention of policies upon termination of employment or retirement. Ten years ago you needed to educate employees about the need. Today it is hard to find someone who does not have their own personal experience with family or a friend. And with health care reform, the questions are becoming more, not fewer.
By the way, my son was the second survivor of the most aggressive cancer known. I am acutely aware of the financial hardships and challenges the family faces during and after this period. The financial impact simply adds insult to injury. If you are someone who looks down your nose at this type of protection I urge you to step back and reevaluate. Employees want it and perceive their need for it. Why not focus on providing them the best coverage instead of telling them what they need? That’s what I do now. I invite you to experience the feeling of employees calling you in tears, thanking you for making the program available when they receive checks during treatment; and the big smiles from your CFOs, HR and benefit managers for making them look good in the employee’s eyes. Every case we have has increased participation in subsequent years. Sadly, the numbers say each case will have cancer claims and individual stories. We try to help them with their claims and, many times, just be there to listen. They all remember I have been there, and they just need someone to listen. It is the least I can do, for there were so many who listened to me.
About The Author
Mr. Brooks has 35 years in the employee benefit business designing and implementing programs for clients from 100 employees to 87,000 employees. He served as Vice President of Marketing when CBS was a division of Frank B. Hall and Company. He has designed multiple benefit products for Fortune 500 and Fortune 100 companies and he will furnish his education and research material and information upon request. 972-393 8686.