Catastrophic illness coverage needed to address outdated benefit plans

Despite the billions of dollars spent on health care in Canada by both public and private payers, there’s a significant gap in the coverage available to Canadians around catastrophic illness.

The recent case of an employee’s son who had an urgent need for health-care services provides an example of the gap. In that instance, it quickly became clear that the employee’s benefit plan was out of date and didn’t meet her or her son’s real needs.

The employee’s son was 15 years old. He had a very severe mental-health condition that required specialized grief counselling and adolescent psychological support services and had had four hospital admissions. Upon his release, the hospitals handed the boy back to the family doctor with no followup care.

The public system was failing him. He required specialized services that were available privately. His mother, however, had recently lost her partner and wasn’t able to pay the $3,000 required for the services.

The limits of benefit plans

The employee’s benefit plan provided coverage in several areas: $300 per plan year for each of chiropractic services; osteopathic care; podiatry/chiropody; massage therapy; naturopathy; speech therapy; psychologist services; and acupuncture. It also provided $1,000 per year for physiotherapy.

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The total annual allocation for the employee was $3,400. Unfortunately, the benefits were in categories the employee would likely never use, and $300 for psychological care wouldn’t do the job.

Our request to the employer and the benefits consulting firm was to reallocate $3,000 of the total annual benefit of $3,400 for the grief counselling and adolescent psychological services. The request was unsuccessful.

New category needed

Given the gaps in both public and private health care, there should be another category added to benefit plans called catastrophic care. If the public system can’t supply the required services, the funding already allocated by the employer should be available to the employee to pay for them outside of the formal categories in the plan.

The formal categories, as shown above, don’t accurately foretell the real needs of the employee or a family member.

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The catastrophic cases would require prior medical adjudication and would follow evidence-based guidelines and best practices. The number of catastrophic cases approved per year would likely be minimal and runaway expenditures wouldn’t be a real threat because the total capital commitment would remain the same. In addition, medical adjudication of claims would prevent abuse.

Critical illness coverage can be part of the solution

If an employee has critical illness insurance triggered by a health condition defined in the policy, cash will flow to the employee. Unfortunately, the employee can’t use the cash to purchase medical services in Canada. But it’s possible to solve the problem by having an insurance company or third-party administrator act as a trustee for the employee, adjudicate the claim and then pay for the services. At the same time, the use of group critical illness insurance would assist employers that fear the growth of the new catastrophic category could overwhelm their capacity to provide benefits.

Read: 55% concerned about financial impact of critical illness

It’s clear that current benefit plan designs are seriously out of date. Insurance companies and benefits advisors have the opportunity to assist employers to redesign benefit plans and provide new products and services that meet the real needs of employees and their family members in an era of increased rationalization of health-care services.

Dr. Raymond Rupert is founder and medical director of Rupert Case Management Inc.

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