Worksite, hospital indemnity, short-term medical…

Four more limited health products

This lesson covers four products that sit outside comprehensive major medical coverage: worksite (voluntary) coverage, hospital indemnity, short-term medical and accident-only policies. Three of them are kinds of coverage; worksite is a way of selling coverage. None of them is designed to be a person's only health insurance.

Florida law treats most of them as separate from a comprehensive plan. Its definition of a health benefit plan expressly excludes accident-only and individual hospital indemnity insurance, along with other supplemental plans built to fill gaps in an underlying health plan (Fla. Stat. § 627.6699).

A chart titled Four limited health products shows four side-by-side columns. The first, worksite, is labelled a way of selling: coverage sold at work, paid by payroll deduction, usually paid by the employee, often portable, and offered with simplified issue at enrollment. The second, hospital indemnity, is labelled fixed indemnity: it pays a fixed amount per day while the insured is an inpatient, regardless of the actual bill, and pays the insured. The third, short-term medical, is labelled expense reimbursement: in Florida each contract runs less than twelve months with a thirty-six month maximum in total, preexisting conditions are often excluded, and a signed Affordable Care Act disclosure is required. The fourth, accident-only, is labelled injury only: it covers accidental injury and never sickness, pays medical expenses or scheduled cash amounts, and depends on whether the policy uses the results test or the accidental means test. Along the bottom, one box says hospital indemnity and accident coverage supplement major medical, and a second says short-term medical is a temporary replacement with fewer protections. A footnote cites the Florida short-term definitions in sections 627.6426 and 627.6525. — Worksite, hospital indemnity, short-term medical and accident-only coverage compared.

Worksite (voluntary) coverage

Worksite marketing means insurance sold to employees at their place of work, with premiums paid by payroll deduction. The key features:

Employee-paid — the employer usually contributes nothing; it simply allows access and

handles the deduction. That is why these are called voluntary benefits.

Individually owned in many designs — each worker gets his or her own policy, so the

coverage is often portable and can be kept by paying the insurer directly after leaving the job.

Simplified underwriting — during an enrollment period, coverage is often offered with

few or no health questions.

Typical worksite products include accident, hospital indemnity, cancer and critical illness, short-term disability and life insurance. Franchise (wholesale) insurance is an older form of the same idea: individual policies issued to members of an employer or association under a single arrangement.

Hospital indemnity

A hospital indemnity policy pays a fixed amount per day (or per admission) while the insured is a hospital inpatient — for example, a set dollar amount for each day confined. The benefit is paid:

regardless of the actual hospital bill,
usually directly to the insured, who may spend it on anything, and
in addition to any other coverage the insured has.

Because it does not reimburse expenses, it is a fixed indemnity product, not medical expense insurance. Florida's blanket-insurance statute lists "hospital indemnity or other fixed indemnity insurance" as its own kind of benefit (§ 627.659(6)(d)).

Short-term medical

Short-term medical is temporary medical expense coverage for someone between plans — for example, between jobs or waiting for new coverage to begin. Florida defines short-term health insurance as coverage with a contract expiration date less than 12 months after the original effective date and, counting renewals or extensions, a total duration not exceeding 36 months (§ 627.6426(1); § 627.6525(1) for group, blanket and franchise policies).

Short-term plans are usually medically underwritten, may exclude preexisting conditions, and do not have to include every essential health benefit. Florida therefore requires a signed disclosure at purchase warning that the coverage is not required to comply with federal Affordable Care Act market rules, may have dollar limits, and may leave the buyer waiting for an open enrollment period when it ends. The disclosure must also list the contract's duration, any essential health benefits it omits, and any preexisting-condition exclusion; it must be in at least 12-point type, and the issuer must keep the signed copy for 5 years (§ 627.6426(2)-(3)). Short-term coverage is not "individual health insurance" for Florida's guaranteed-availability rules (§ 627.6487(2)(b)).

Accident-only policies

An accident-only policy pays only for injury caused by an accident — never for sickness. Designs include accidental medical expense (reimbursing treatment of an injury, often up to a stated maximum) and scheduled cash benefits for events such as emergency room visits, fractures or dislocations. Accidental death and dismemberment is a related benefit covered in an earlier lesson.

How a policy defines "accident" matters:

Accidental bodily injury (the results test) — covered if the result was

unintended and unexpected, even if the act was intentional. This is the broader wording.

Accidental means — covered only if the cause itself was accidental. This is the

narrower wording.

Accident coverage is common as blanket insurance: Florida allows blanket policies issued to a sports team or camp, or to a travel organization, covering the people who take part (§ 627.659(9)-(10)), and a blanket policy covering newspaper delivery contractors may be limited to accident coverage (§ 627.659(6)(a)).

Hospital indemnity and accident-only policies supplement major medical; short-term medical temporarily replaces it, with fewer protections. None should be sold as a substitute for comprehensive coverage.

Worksite, hospital indemnity, short-term medical, and accident policies