Timeless Truth

Feb 6, 2024

“Don’t throw the baby out with the bathwater.”

The phrase is still as spot on today as when it originated in a German proverb more than 500 years ago.

Case in point: The U.S. federal government has proposed a regulation to remedy troubling issues related to the sales, marketing, and structure of short-term, limited duration insurance (STLDI) products.

But the proposal also includes provisions that would be destructive to very valuable supplemental benefit products including hospital indemnity, other fixed indemnity and specified disease. If changes aren’t made to the government’s proposal, the supplemental benefits that so many Americans rely on would be swept away.

Supplemental benefits should not be lumped in with STLDI. Major differences include:

  • STLDI is a form of major medical coverage that pays for medical care. Supplemental benefits are meant to pay for additional expenses arising from illness or injury that are not covered by major medical insurance.
  • STLDI is intended to last for a specified amount of time to bridge gaps in medical coverage between employment. Supplemental benefits are usually guaranteed to continue in force without changes as long as the premiums are paid.
  • STLDI is usually marketed directly to individuals. Supplemental benefits are often made available through employers as part of employee benefits offerings. These products see very high consumer satisfaction rates and very low complaint levels. And they are increasingly popular with employers, labor unions and governments looking to offer competitive benefits to help attract and retain the workforce they need.

A 2022 survey of supplemental insurance beneficiaries found an overall satisfaction rate between 92 and 99 percent depending on the product. They overwhelmingly considered their supplemental benefits to be highly valuable in shielding them from financial worries and protecting their household budgets when they are sick or injured.

60% of the supplemental benefit policyholders are married workers with dependents. Nearly half earn less than $49,000 a year. Hard-working Americans from coast-to-coast depend on and benefit from the peace of mind these benefits provide.

ACLI and our member companies who sell these products have no objections to the sections of the rule dealing with STLDI. But if the rule isn’t amended, it would grievously harm millions of Americans who depend on the supplemental benefit products.

Don’t throw the baby out with the bathwater, indeed.

Lauryl Jackson

Lauryl Jackson is Vice President, Federal Relations for Financial Income Security and Diversity & Inclusion for the American Council of Life Insurers (ACLI). Prior to joining ACLI in January 2020, she led government affairs strategy for the priorities of the pharmaceutical industry.

Cindy Goff

Cindy Goff is Vice President, Supplemental Benefits and Group Insurance at the American Council of Life Insurers (ACLI), where she develops and implements state and federal public policy positions and strategies to ensure access to innovative financial protection products. She has also served as Director of Health Policy for Aflac and VP of Product Policy at America’s Health Insurance Plans.