Voluntary Benefits – Producers Can Change the Game with Voluntary Benefits

by Jeff Caldwell

The onset of fall only means one thing for many sports fans: football season is here. Players have spent countless hours preparing for the upcoming season studying film, doing conditioning, and going to practice.

Now it’s time to make their mark where it matters most – on the field. By recognizing their opponent’s pattern of play, a player can become a game-changer with one play and provide a victory for the team.

The employee benefit season is also here, and it is time for producers to make their mark. Producers can change the employee benefit game by integrating voluntary life and supplemental health products into the overall strategy. They can implement benefits that are easy to understand, simple to enroll, are supported by payroll deduction, and are available at no cost to the employer. Customized products and packaged solutions can help employees reduce their out-of-pocket exposure to rising health plan deductibles. Employers can even improve productivity while attracting and retaining top talent – all because they provide options that offer that help with the financial protection that employees need.

Producers have many challenges to overcome, such as health care reform, employee exposure to increased deductibles, rising major medical premiums, the need to educate employees on benefits, a decline in agency revenue and insurance exchanges. Plus, employers and employees face conflicting interests when it comes to health insurance coverage. Employers prioritize lower cost over higher quality while employees prefer higher quality over lower cost. Sixty-two percent of workers prefer to pay more for a higher quality health coverage option, compared to only 38% who would prefer to reduce insurance costs even if it means lower quality, according to a Transamerica Center for Health Studies survey.

What Employees Are Saying about Voluntary Benefits

Voluntary products have expanded over the past several years. Employees are increasingly making their financial protection decisions at the workplace. These products offer more financial protection than ever for employees, and they can improve employee engagement and retention. Well-rounded benefit programs are a major influence in job satisfaction among potential and current employees. On behalf of Transamerica, Harris Interactive did a nationwide survey of 2,028 U.S. adults employed full-time by companies. The following results show respondents’ interest in voluntary benefits and their desire to purchase them:

• 65% said that it is very or somewhat important for their employer to offer voluntary benefits.
• 64% said their knowledge about voluntary benefits is about the same as it was three years ago.
• 62% are likely to purchase voluntary products if faced with less comprehensive benefits due to health care reform.
• 47% had not been offered additional voluntary benefits by their employer since health care reform legislation was signed into law in 2010.
• 46% said it is likely or very likely that they would remain at their current employer primarily due to the voluntary benefit package offered.
• Employees consider price, need and fear of inadequate coverage as most important when purchasing voluntary products.
• When asked how they would like to receive information about their benefits from their employer, the top three responses were e-mail (54%), employer internet/intranet site (29%) and one-on-one meetings (27%).

Voluntary Benefits Get Popular

Voluntary benefits, such as critical illness, accident, short-term disability and cancer policies, are becoming increasingly important due to health care reform. Critical illness insurance provides a lump-sum to help pay for expenses including deductibles, co-pays, child care, credit card bills and travel for medical treatment. Accident insurance helps employees pay for the medical bills and other out-of-pocket expenses that often arise after an unexpected injury.  Many employees ignore short-term disability, mistakenly assuming that their savings will cover costs until their long-term disability and/or long-term care kicks in. Cancer insurance helps provide financial protection for the treatment and non-medical expenses associated with the rising cost of cancer care.

Two additional products are gaining momentum – supplemental medical expense and hospital indemnity insurance. Supplemental medical expense plans pay a benefit for deductibles, co-insurance and copayments for expenses associated with the employer’s basic, major medical or comprehensive medical plan. Hospital indemnity insurance pays a specified amount for each day an employee is confined to the hospital. It can provide benefits for a range of other medical situations through a series of optional riders. Employers can customize plans to include hospitalization benefits only or include diagnostic procedures, outpatient surgery, intensive care and other benefits.  Although health care reform doesn’t affect life insurance, employers can add it to enhance a benefit package, especially the options of accelerated death benefits for living care and critical illness.

Voluntary Benefits Help Employers Meet HR Objectives

Paying for and maintaining a comprehensive benefit package is tough for most employers, particularly with the onset of health care reform. Controlling costs is the top benefit issue for employers, with more than 80% ranking it among their top three challenges, followed by dealing with the implications of health care reform and keeping employees healthy,  according to a 2013 survey by Gallagher Benefit Services. Employers want solutions to drive down utilization, reduce physician office visits, and protect employees’ out-of-pocket exposure to increased co-payments, co-insurance amounts, and deductibles. Even under health care reform, high deductibles and rising premiums will continue. But with the right strategy, voluntary products can help provide rate stabilization while giving employees resources to defray these out-of-pocket expenses.

About 21% of employers view voluntary benefits as important, and 83% plan to take advantage of voluntary benefits to enrich the core benefit plan, according to a 2013 Towers Watson survey.  By offering customized product designs and packaged solutions, employers can use voluntary benefits to supplement their major medical plan, reduce the out-of-pocket exposure to increasing deductibles and provide choices to help protect employees financially.

A company that offers comprehensive voluntary benefits protects its business by safeguarding the financial wellness of its employees, resulting in a more loyal and productive workforce. As a new employee benefit paradigm continues to emerge, more employers will evaluate the perceived and real value of adding new voluntary benefits.

The Opportunity for Producers

Now is the time to sell voluntary benefits as the economic recovery and health care reform reshape the benefit landscape. Voluntary benefits will play an even greater role in companies of all sizes and industries. With the right educational and enrollment tools, you can take your business to the next level. Producers with insight, vision and an ability to execute will be in the best position to take advantage of these marketplace opportunities. Changing the game means adding voluntary benefits to your portfolio and developing the skills to market and enroll these programs for current and prospective clients. The game is not over; there’s still an opportunity for producers to bring something new and bold to their clients. q

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Jeff Caldwell is marketing director of Transamerica Employee Benefits.