Carve-Out Insurance: A Safety Net for Companies and Employees
In the world of insurance options, employers do work hard to balance out the risks and rewards of their coverage strategies. As they consider their choices, companies would be remiss to ignore the protection and benefits offered by carve-out insurance.
How Does Carve-Out Insurance Differ from Regular Insurance?
Traditional health insurance covers a wide range of everyday treatments, medications, and procedures. An individual’s regular insurance may cover a visit to the doctor for the flu, a well-woman exam, or to have a condition such as heart disease diagnosed, treated, and monitored. Everyday insurance also covers a variety of prescription medications and treatments that people experience more frequently.
Carve-out insurance is more specialized. It covers treatments and prescription medications that aren’t typically included in traditional insurance plans because those treatments are more rare but are incredibly costly. Carve-out insurance is meant as a supplement to regular insurance.
What kind of care and treatment are typically covered under carve-out plans? They may cover hospitalization in a burn unit, organ transplants, neonatal care, dental and vision care, mental health treatment, as well as specialized pharmaceutical treatments.
An Effective Risk-Management Strategy
Given all of this, who purchases carve-out insurance? While such coverage sounds valuable, the average person doesn’t take the time to pre-plan for things like burn unit care. Most people assume that things will run smoothly and don’t give a thought about the need for options such as neonatal care until they’re suddenly necessary.
While individuals may not plan for potential catastrophe, in order to run successfully, a company must do so – especially if it self-funds its company’s health plan. Failing to do so can be costly.
Numbers from the United Network of Organ Sharing (UNOS), for instance, reveal that the average cost of an organ transplant and caring for a transplant patient is more than $400,000 and sometimes as high as a million dollars. What’s the likelihood that in any given company, an employee will need this kind of care? Looking at the statistics, if a company with 250 employees hasn’t incurred a transplant claim within 5 years, there’s a whopping 50% chance of a claim being filed within the next year.
Those are sobering numbers; and a good reason why carve-out insurance is an excellent investment.
What About Stop-Loss Insurance?
While stop-loss insurance is an effective safety net for many kinds of claims, it’s often not a helpful buffer against the specific kinds of claims against which carve-out insurance protects. Many organ transplants, for example, require the patient to be on a waiting list for a year or longer. During this time, their condition will identified as a “known risk” that will single them out when the plan renews. This could leave the self-funded employer footing the bill for the entire cost of treatment.
Added Benefit to Attract Quality Employees
In addition to being a valuable safety net for the company, carve-out insurance coverage functions as an attractive benefit to bring the best candidates on board. Even if individuals aren’t thinking in terms of organ transplants and mental health care, potential employees will be more enthusiastic about signing up with a company that cares about its people enough to offer them dental and vision coverage.
Both as a protection for the company’s bottom line, as well as an added benefit for its employees, carve-out insurance solutions simply make sense.