Benefits Enrollment

Employers looking to attract and retain top talent are considering different types of medical benefits to meet employee expectations. While major medical insurance remains the gold standard, some businesses are exploring limited health plans as a supplemental option. But are these plans right for your business? Understanding the role of limited health plans and how they fit into an employee benefits package can help you determine if they align with your company’s needs. What Are Limited Health Plans? Limited health plans are medical insurance policies that offer lower benefits and coverage restrictions compared to major medical insurance. These plans come with significantly lower premiums but do not provide the comprehensive coverage mandated under the Affordable Care Act (ACA). Types of limited health plans include: Fixed Indemnity Plans – Pays a set amount per medical service, regardless of the actual cost. Critical Illness Plans – Provides a lump-sum payment for serious diagnoses like heart attacks or strokes. Hospital Cash Plans – Pays a fixed amount per day of hospitalization. Accident-Only Plans – Covers medical costs associated with accidents. Accidental Death and Dismemberment (AD&D) – Pays out if an employee loses a limb, eyesight, or life due to an accident. Short-Term Health Plans – Temporary coverage for those in transition between major medical policies. Unlike traditional health insurance, these plans are designed to supplement coverage rather than replace major medical insurance. The Benefits of Offering Limited Health Plans While limited plans cannot serve as primary health insurance, they can offer advantages when included as part of an employee benefits package. 1. Helps Offset High Deductibles Many employees enroll in high-deductible health plans (HDHPs) due to their lower premiums, but these plans require employees to pay substantial out-of-pocket expenses before coverage kicks in. A limited plan, such as a fixed indemnity or critical illness policy, can help reduce these financial burdens. 2. Affordable Option for Employers and Employees Limited health plans are significantly cheaper than major medical insurance, making them a budget-friendly option for businesses looking to enhance their benefits package without a significant increase in costs. 3. Attracts and Retains Employees According to SHRM’s 2021 Annual Employee Benefit Survey, many employers have expanded their supplemental health insurance options. Offering additional coverage options, even in the form of limited health plans, can make your business more attractive to potential hires. 4. Useful for Employees in Transition Limited plans can be an ideal option for employees: Between jobs or recently laid off Aging out of parental insurance Missed ACA open enrollment Self-employed or working as freelancers Frequently traveling for work and needing out-of-network coverage Should Your Business Offer Limited Health Plans? Whether limited health plans are right for your business depends on several factors: Do your employees have high-deductible health plans? If so, offering a supplemental limited health plan can provide additional financial protection. Are employees looking for more affordable options? Limited plans can be an appealing choice for those who need lower-cost insurance alternatives. Do you want to enhance your benefits package without increasing costs significantly? Limited plans can provide added value to employees without the high expense of major medical insurance. Is employee retention a priority? Competitive benefits can help attract and retain talent in today’s workforce. Final Thoughts While limited health plans are not a replacement for major medical insurance, they can serve as a valuable supplement to existing coverage. If your business wants to provide additional financial protection for employees without significantly increasing costs, these plans might be worth considering. Before making a decision, consult with KBI Benefits to ensure you are offering the most optimized benefits for your workforce. This can mean the difference between a positive and negative ROI on your employee benefits. Contact a benefits expert today to explore the best options for your business.