Attracting top independent talent with Critical Illness insurance

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Key takeaways

Critical illness insurance is a valuable product for independent workers whose Affordable Care Act or private health plans expose them to high out-of-pocket costs. 

In the U.S., working a full-time job with one employer has been the norm for decades. However, over the past several years, more Americans are choosing a different career path and identifying as independent workers.

Independent workers can go by several names—freelancers, contractors, temporary workers and gig workers—but in general they are self-employed, highly skilled people who set their own hours and rates. In the U.S., 36% of Americans identify as independent workers, up from 27% in 2016.

Independent workers face costly health insurance challenges
Independent work comes with advantages like autonomy and flexibility, but it has challenges, too, with one of the greatest hurdles being health insurance. Without access to employer-sponsored health plans, many independent workers turn to Affordable Care Act health coverage or private plans. But these plans can be costly—and can leave independent workers exposed to high out-of-pocket costs. For example, in 2023, the maximum out-of-pocket limit for an Affordable Care Act plan is $9,100 for individuals and $18,200 for families.2

For independent workers, one of the greatest financial threats is a serious health event, such as a critical illness.
A cancer diagnosis, heart attack or stroke can expose someone to high deductibles, copayments and coinsurance until they reach that annual out-of-pocket limit. And it’s important to keep in mind that 52% of Americans have less than $5,000 in savings.

A solution: critical illness insurance
Critical illness insurance provides a valuable solution for anyone who needs to reduce their financial risk in the event of a critical illness diagnosis. Critical illness insurance is a type of supplemental health insurance that pays benefits for common critical illnesses, such as cancer, heart disease, diabetes, Alzheimer’s disease, end-stage renal failure and more. It’s meant to be purchased in addition to primary health insurance, such as an Affordable Care Act plan, and it pays benefits regardless of other plans.

How critical illness insurance works
With critical illness insurance, cash benefits are paid directly to policyholders, not to doctors and hospitals. This means the money from a critical illness claim can be used for any purpose, including helping cover medical bills, lost wages and living expenses. This extra source of cash can be a lifeline for anyone facing critical illness, but especially for independent workers who don’t have the benefit of paid time off and disability coverage.

Here’s an example of how a critical illness insurance policy could work:

  1. Medical concern: Susan notices blood after using the restroom.

  2. Diagnosis: She gets a colonoscopy and is diagnosed with colon cancer. Her critical illness insurance policy pays screening benefits for her colonoscopy.

  3. Critical illness insurance helps when it’s needed most: Susan’s policy pays lump-sum cash benefits directly to her, and she uses the money to help cover medical bills and lost wages while she reduces her freelance workload to receive cancer treatments.

The cost of critical illness insurance
Cost is an important factor for independent workers who pay all their own health insurance premiums. Fortunately, critical illness insurance premiums are typically considered to be very affordable and are comparable to nonessential items like a latte or fast-food habit.4 Many people feel that critical illness insurance premiums are negligible compared to the financial impact of a serious diagnosis.

Attract and keep the best independent workers with voluntary benefits
Does your business rely on the highly skilled talents of W-2 and 1099 contract workers? Historically, most organizations have not offered benefits to independent workers, but this is starting to change due to the competitive labor market and the rise in highly specialized freelancers. Stand out as an employer of choice among this growing sector of valuable talent by offering your contingent workers access to employee-paid voluntary benefits.

Optavise can help you fill this need. We’re a trusted partner, guiding employers and their employees through healthcare choices including voluntary benefits, benefits administration, and year-round advocacy services that reduce costs and increase benefits engagement.