8 Reasons to Select a 24 Hour Accident Insurance Plan Design

Accident insurance plans pay employees cash in the event of covered accidents. When putting an accident insurance plan in place, one of the first options you'll need to decide is if you'll allow the accident plan to cover employees 24 hours a day or only cover them for off the job related accidents.

RESOURCE: If you aren't familiar with accident insurance policies, check out The Definitive Guide to Accident Insurance Policies.

What's The Difference Between 24 Hour Coverage And Off The Job Coverage

An accident policy that covers you around the clock whether you are working or not is called 24 hour coverage. A covered accident would pay regardless of whether you were working or not.

The other option is off the job only coverage. This would only cover you when you weren't working. So, if you fell down at work and broke your leg, you wouldn't receive any benefits from your accident policy. This would be the case even if a broken leg is a covered accident under your policy.

However, if you broke your leg playing softball after work, then that's an off the job related injury and you could receive benefits for that.

Accidents that occur on the job may be also covered under workman's compensation insurance.

Not Every Employer Group Qualifies For 24 Hour Coverage

Depending on the type of employer group you are, you may not have the option to elect 24 hour accident coverage. For example, a municipality with a large majority of police and fire employees might not qualify.

If your employer group qualifies for 24 hour coverage, that's a big plus. And in my opinion, if you are able to offer 24 hour coverage, that's what you should offer your employees if you can get it.

Employer Groups Often Don't Offer 24 Hour Coverage Even When Their Employees Are Eligible For It

Even when their employees might be eligible, some employers choose not to let their employees get the 24 hour coverage.

I guess the thinking is that employees will abuse the benefits of the policy and then also make workman's compensation claims to somehow game the system.

In my opinion, it's a mistake to opt employees out of 24 hour coverage when they can get it.

Let's get into why I think that.

Eight Reasons To Offer The 24 Hour Coverage To Your Employees

Now that you know I'm an ardent supporter of 24 hour coverage, let's go through some reasons why it's a good idea to go with the 24 hour coverage.

1. The employee is paying the premium If the employee is paying 100 percent of the premiums for the policy, then you should get a policy that serves them best. If you are contributing to the cost of the plan, then that might be different.
2. The plan is portable The employee probably won't work for you forever. If the policy is portable and they can take it with them, that 24 hour protection goes with them.
3. You don't penalize the whole family Accident plans also cover family members and that 24 hour coverage extends to them as well. If an employee has a spouse that's in a high risk profession that wouldn't normally qualify them for 24 hour coverage, they could get it if you offer it. 
4. It doesn't cost that much more Compare the difference in premiums. The cost probably isn't that much more to offer 24 hour coverage. It's well worth it to avoid the confusion employees might experience when accidents happen on or off the job.
5. You want to offer policies that pay not one's that don't Employees hate insurance but more importantly, they hate paying for policies that let insurance companies out of paying. When an insurance company doesn't pay for something that an employee perceived they would get, everyone looks bad.
6. Health insurance plan deductibles are so high It's not unsual for employees to have $10,000 worth of deductibles between them and their families before the health insurance pays anything. Every dollar can help when an employee or a covered family member has an accident.
7. Supplement off the job short term disability Payments from an accident insurance policy that has 24 hour coverage can supplement a short term disability income insurance plan that only covers off the job accidents.
8. Act as short term disability Since short term disability is often offered as an optional employee paid benefit, it's not unusual for employee's to waive the short term disability option. While not a replacement for short term disability, a 24 hour accident insurance plan is better than nothing.

Those are my eight reasons to opt for 24 hour accident coverage when designing your plan.

Conclusion

You as the employer are in control of what's offered to your employees in terms of workplace benefits. If you can get 24 hour coverage, I'd encourage you to offer it instead of the off the job only coverage.

If you employees are paying the full premium of the accident insurance plan, and are eligible, give them the 24 hour coverage option.

What are your opinions on choosing 24 hour accident insurance coverage over off the job only? Feel free to put them in the comments.

The Definitive Guide to Accident Insurance

Accident insurance pays cash directly to the insured in the event of a covered accident. These payments can help offset the costs of out of pocket expenses for deductibles, co-payments, co-insurance, other related expenses or be used to pay everyday expenses. Since the money is paid directly to the insured, it's really their decision on how it is used.

RESOURCE: This guide is a part of my larger guide called The Definitive Guide to Workplace Benefits. Be sure to check it out.

A base accident policy only pays in the event of an accident. It will not pay any amount for sickness or illness. If you have a cold or flu and go to the doctor or emergency room, you won't receive any payment from the insurance company. However, if you break your arm because of an unexpected fall, that most likely will be a covered accident and you could receive payment.

What Is The Purpose Of An Accident Insurance Policy

Just like a critical illness insurance policy, an accident policy's purpose is to help pay for things things that your medical insurance might not cover if you have an accident. Over the years, deductibles, co-payments and co-insurance amounts required to be paid by policyholders have risen dramatically. It's not unusual for health insurance plans to have a $5,000 individual deductible or a $10,000 family deductible on top of premiums, co-payments and co-insurance.

As these out of pocket costs have risen, the need for supplemental coverage like accident insurance has increased to help provide cash to pay for those expenses.

Keep in mind, an accident policy is not set up to reimburse you for actual costs incurred. It's set up to only pay a specified amount as outlined in the policy. It's possible the actual cost of your injury could be higher or lower that your actual costs.

It's also not meant to provide you an income if you are off work and not getting paid due to being disabled because of your accident. That's the purpose of disability income insurance.

Specific Injuries An Accident Insurance Policy Might Cover

Depending on the insurance company, an accident policy will cover a wide range of injuries. Here's a sample list of the types of injuries you might see covered.

• Paralysis
• Torn knee cartilage
• Ruptured disc
• Tendon
• Ligament
• Rotator cuff
• Fractures
• Dislocations
• Burns
• Coma
• Concussion
• Lacerations
• Eye injury
• Dental injury
• Accidental Death
• Dismemberment

NOTE: One thing I didn't quite know until I started working with accident policies is what the terms closed reduction and open reduction meant with regard to fractures. The difference between the two are that a fracture that doesn't require surgery is a "closed reduction" and one that does require surgery is called an "open reduction". Accident policies sometime pay more for fractures that require surgery.

Types of Care Covered Under An Accident Insurance Policy

Benefits are payable under an accident insurance policy for covered accidents and also for care related to those accidents. You can break down this care into four basic categories. Those are:

• Initial care Initial care benefits due to a an accident could include an emergency room treatment, a physicians doctor's visit, ambulance or diagnostic screenings benefit.
• Hospital care Hospital care could include being admitted to the hospital, admitted to an intensive care unit, having surgery or rehabilitation.
• Follow-up care Follow-up care could include medical appliances, physical therapy, prosthetics
• Transportation benefits If you have an accident away from home, certain transportation and lodging payments might be made.

Who You Can Cover

You can typically cover you and your immediate family under an accident policy. That would include:

• Employee
• Spouse
• Children

Are You Getting 24 Hour Coverage or Off the Job Only Coverage

An important part of an accident insurance policy is whether it covers you 24 hours a day for accidents that happen on or off the job. Many policies are set up to only provide benefits if you have an accident off the job. If you have an accident that occurs at work with off the job only coverage it would not pay.

Many employers choose to offer accident policies that are off the job only.

The thinking here is that workers' compensation will pick up the tab for on the job accidents. However, I know people who have had to use workers' compensation and they were not that thrilled with how an injury at work was dealt with in their personal situation.

In addition to that, companies decide to set up accident insurance policies to exclude on the job accidents I guess to prevent employee's engineering accidents to take time off or to abuse the policy. It's an attempt to police what someone may or may not do because they have an accident policy.

In spite of that, I am a big believer in accident policies that provide 24 hour coverage if the employer group qualifies for it.

Since 100 percent of the premiums are usually paid for by the employee and the cost for the 24 hour coverage is not that much higher than off the job only coverage, I believe that every accident policy offered at work should provide 24 hour accident insurance coverage because it's the employee's dollars at work here.

I feel insurance policies have enough exclusions and encourage every company to offer 24 hour coverage in all cases and you have an employee abusing their time off to deal with that directly.

Be sure and check your specific plan to be sure it has 24 hour coverage.

Guaranteed Issue

Accident insurance is issued on a guaranteed issue basis because it doesn't pay medical benefits in the event of sickness. It only pays benefits in the event of a covered accident. As such, accident insurance is guaranteed issue.

Is My Policy Portable?

Most policies are portable. How portable they are depend on whether they are written as individual policies are as group policies. Some policies have to be kept for a certain length of time in order to take them with you. Some last for life and others not. It really depends on the insurance company.

In The End Always Read Your Policy (For Exclusions)

As always you must read your policy. Some have little restrictions in them that prevent payments you might have thought you were due. The 24 hour coverage and off the job only restriction above is another example. Then there are the obvious exclusions like self-inflicted injuries or an act of war. But you also have to watch for other fine print that exclude injuries that might happen out of the country as an example.

So again, always read your specific policy to get completely familiar with how your plan works.

The Definitive Guide to Workplace Benefits

Below you'll find my Guide to Workplace Benefits. Let me know if you have any questions about my guide in the comments section below. I want this post and along with my workplace benefits videos to be the best, most comprehensive and helpful guide about workplace benefits available. Your questions will help me provide a better, more insightful guide.

Health Insurance Benefits, Programs & Services

Health insurance pays for covered medical expenses, while other programs provide tax savings for health care expenses and other services to promote and treat your health and well being.

• Major medical plans
• Prescription drug coverage
• Section 125 plan
• Flexible spending accounts (FSA)
• Health savings accounts (HSA)
• Employee assistance program (EAP)
• Wellness programs
• Tobacco cessation programs
• Teledoctors
• Healthcare price transparency tools
• On site health clinic
• Athletic facilities

Dental & Vision Insurance Benefits

Taking care of your teeth is what dental insurance benefits are all about. From eye exams, to eyeglasses to contacts, vision insurance help employees pay for the costs of eye care.

Life Insurance Benefits

Life insurance provides a death benefit to a beneficiary when an insured that is covered under the policy dies. Below I've listed the types of life insurance that might be made available to employees at work either under the terms of a group term life insurance contract or an individually owned contract.

• Basic Group Term Life Insurance
• Supplemental Group Term Life Insurance
• Dependent Group Term Life Insurance
• Accidental Death and Dismemberment (AD&D)
• Permanent Life Insurance

Even though life insurance is a pretty simple concept, many employees still get confused about what their life insurance options are both at work or on their own on an individual basis. Most employees know they have something at work but aren't sure how much or what type it is.

It's not also not uncommon for those responsible for administrating the life insurance programs for an employer group to not know all the details about how they work. This sometimes includes not just the human resources professionals but also the agents who put these programs in place.

Here's a collection of resources to help you get a better understanding of life insurance provided at work.

• Definitive Guide to Life Insurance
• 8 Problems with Group Term Life Insurance
• 6 Reasons Employees Enroll in Permanent Life Insurance
• Why It's Not Always Easy to Buy Life Insurance on Your Own
• Are Your Group Insurance Rates Attained Age or Issue Age?
• Group Life Insurance Conversion and Portability Explained

Flexible Working Hours, Telecommuting, Paid Time Off, Sick Pay, Workers Compensation & Disability Income Insurance Benefits

Paid time off and medical leave provide time off when you need it while sick pay, workers compensation and disability income insurance policies provide money to employees when they are sick or hurt and can't work because of it. Flex time and telecommuting provide you more freedom and control in how they work.

• Paid time off (PTO)
• Sick pay plans
• Workers compensation
• STD: Short term disability income
• LTD: Long term disability income
• Family medical leave
• Flex time
• Telecommuting

Critical Illness/Specified Disease Insurance, Accident Insurance & Other Indemnity Insurance Benefits

Critical illness and specified disease insurance pays you money in the event an employee is diagnosed with a critical illness or specified disease. Accident insurance pays benefits directly to the insured for covered services related to an accident, while other indemnity insurance programs offer payments for other medical services not covered by health insurance plans.

Articles about critical illness you can read here on my site:

• Definitive Guide To Critical Illness Insurance Policies
• Nine Reasons To Buy A Critical Illness Insurance Policy
• Guide To Accident Insurance
• Eight Reasons 24 Hour Accident Insurance Coverage Is Best For Your Employees

Long Term Care Insurance Benefits

Long term care insurance is a little understood insurance benefit that some employers choose to offer their employees.

Saving Money, Retirement Plans and Financial Planning

Saving money for emergencies, for retirement and planning for the future.

• Direct deposit
• Premium direct deposit
• Savings bonds
• Social Security
• Retirement plans
• Stock options
• Financial consulting

Other Workplace Benefits

In addition to insurance benefits, there are a number of other benefits that employers offer to their employees. Here are a few additional workplace benefits you might see offered.

• Benefit statements
• Purchasing programs
• Home & auto insurance discounts
• Prepaid legal plans
• Employer sponsored identity theft protection
• Pet insurance
• Educational assistance
• Achievement awards
• Adoption assistance
• Dependent care assistance
• Employee discounts
• Transportation (commuting) benefits
• Cell phone
• Moving expense reimbursement
• Unemployment insurance
• Meal plans

The above guide to workplace benefits is a good foundation for the types of programs that employers might choose to offer their employees.

What are Voluntary Benefits?

You might think of voluntary benefits as insurance benefit plans that employees can purchase "voluntarily" through their employer if they decide they want to enroll in them. While technically this is true, it also implies that some insurance benefits are required to be purchased by the employee. But this is not the case. Employees are not required to buy any insurance benefits at work. All insurance products offered for purchase through an employer are optional benefits as far as the employee is concerned.

Mandatory Benefits: The Employer Must Provide Them By Law

For an employer though, it's different. There are some benefits that the employer must provide to employees. Mandatory benefits are things like:

• Paying social security taxes
• Providing unemployment insurance
• Providing workers' compensation

It's the law - or mandatory - that an employer provide the benefits listed above. They have no choice.

Voluntary Benefits: The Employer Can Offer Them If They Choose To Do So

However, it's not the law that an employer offer a product like life insurance that employees can purchase and so life insurance is a voluntary benefit as far as the employer is concerned.

So, the main reason we use the word voluntary is because there are some benefits employers must provide to employees that are mandatory. Anything not required by law is voluntary. The employer can offer them if they want but they don't legally have to.

Just Because A Benefit Is Voluntary Doesn't Mean There Are No Underwriting Requirements

I make the distinction between mandatory benefits and voluntary benefits being used in terms of whether an employer has to offer them by law for a very important reason. The reason is that most employers often use the word voluntary in a different context.

The context is that the word voluntary seems to mean that it's voluntary that the employee buy it and therefore there are no underwriting requirements on the employer to offer programs to their employees when there are.

It's important to understand that any program you offer to your employees does come with underwriting requirements attached to them, even if the employee pays the full premium.

Old School View Of Voluntary Benefits - Worksite Benefits

Traditionally, employee benefits have been broken down into two distinct categories. Those two categories are:

1. Group insurance This is insurance provided through group contracts that are owned and controlled by the group. These would be things like basic group term life insurance, group dental and group disability. While enrollment in these types of group benefits is voluntary, aside from the group health insurance, group contracts are often labelled ancillary benefits to differentiate them from the second category of insurance benefits.
2. Worksite benefits This is insurance provided through an individual insurance contract that is owned and controlled by the employee offered through work. These would be things like life, cancer and accident insurance. These types of insurance have historically been called worksite benefits or "voluntary" benefits. Typically, worksite products have their roots in individual contracts. Since employees owned these contracts, they could continue them after they left employment as well.

Both group and individual insurance offered through an employer help the employee. That's because the employer uses the group's buying power to negotiate a better deal than employees can get on their own for insurance they feel they need. This could be seen in:

• Lower insurance premiums
• Reduced underwriting requirements
• Both lower premiums and reduced underwriting requirements
• The convenience of paying premiums through payroll deduction

These are the true benefits that employers offer when offering voluntary benefits.

What I see in practice is that most employer groups often look at the group insurance contracts as the real benefits and focus most of their time on those. They often gave little thought or importance to the old school worksite benefits.

The insurance companies and agents offering those benefits through an employer were typically the second class citizen of insurance benefits with employers. More times than not, it was implied that the worksite benefits are available but we aren't going to do much to facilitate their purchase.

With the rising costs of health insurance, this attitude is changing because employer groups are reducing their contributions to the overall costs of an employee's benefits. Since the financial burden on the employee is increasing significantly, employers are under a lot of pressure to help employees find ways to assist them in paying these rising costs at their own expense.

The answer is a bigger focus on voluntary benefits to help fill those financial gaps.

The New Voluntary Benefits - Workplace Benefits

A transition has been made over the last few years from the old school of group contracts and individual worksite contracts. Those lines are being blurred. Today, the new landscape is that you've got the health insurance and then everything else is referred to as workplace benefits, aka "voluntary" benefits. These benefits are written through group contracts more than individual contracts like in the past.

These workplace benefits are now broken down into five different types of insurance plans. Those are:

1. Life insurance Life insurance provides money to employee's beneficiaries in the event they die to soon. The types of life insurance offered can be term, universal or whole life insurance.
2. Disability income insurance Disability income insurance provides income replacement in the event of a disability. There are two types of disability insurance, short term and long term.
3. Supplemental health insurance Supplemental health insurance provides medical coverage for gaps in an employer paid health insurance plan.
4. Accident insurance Accident insurance provides cash paid directly to the employee in the event of specific accidents.
5. Critical illness/specified disease insurance Critical illness coverage provides a lump sum payment to the employees in the event of certain catastrophic illnesses like cancer, heart attacks, and strokes.

Rising health insurance costs have put voluntary workplace benefits in the spotlight. Employers have figured out they can reduce health plan benefits or raise deductibles in the main health plan and then reduce their overall premiums. Employees then have the choice to fill the gaps important to them with the menu of workplace benefits but now at their own cost.

Conclusion

That's a summary of what the industry's view of what voluntary benefits are today.

In my view, I believe that if the employee has to pay the full cost of a voluntary benefit, then the benefits of ownership should also be included. So, while the industry has shifted their focus more on using group contracts to fill the need of the old worksite benefits, I still prefer individually owned insurance contracts at work whenever possible.

If you have any questions, feel free to let me know in the comments below.