Our Annual View from the Top – How Blowing Your Own Horn Can Make Your Clients Aware of These Products
by Leila Morris
In this article, experts give their take on trends and opportunities in the voluntary benefit market. Executives tell us that many employers didn’t have time to think about voluntary benefits while they were consumed with the changes in healthcare over the past few years. But, now that the dust is settling, it’s time to show employers how voluntary plans complement their current benefits.
1. How has health care reform affected the market for voluntary benefits?
Tom O’Keefe, voluntary benefits regional practice leader, Unum: Employee benefits have rarely been as widely discussed and considered as they have been in this era of reform. As employers balance the requirements of the Affordable Care Act with the needs of employees, they are choosing plans that give employees more choice in benefit decisions. Voluntary benefits, especially critical illness, hospital indemnity, and accident insurance, complement medical offerings, whether it is a PPO, HMO, or HDHP.
Al Tyler, regional vice president, EyeMed: The ACA has ushered in a new era of benefit consumerism. People scrutinize their benefit decisions and transactions more than before. They look for value, convenience, and customization in the same way they do with other purchases. This kind of decision-making leads to increased competition and more innovation in the market.
Art Dammers, director of Voluntary Practices and Business Development, Anthem: Health care reform has increased employer and employee awareness of voluntary benefits, especially around the need for supplemental healthcare products that fill the gaps in high deductible medical plans.
Danielle LaRose, Colonial Life: It’s made communication and benefit education more important than ever. More brokers are entering the voluntary benefit market to diversify their offerings and supplement income they may be losing as a result of health care reform mandates. It’s a great time for brokers to explore voluntary benefits, especially when they partner with a carrier that offers products and services that can help them be successful without having to make considerable investments in their own infrastructure.
Stephanie Shields, vice president of product and marketing for Aflac Group Insurance: Without a doubt, 2015 was a year of big change in the health care industry. We can’t predict what will come in years ahead, but do know that the cost of health care continues to rise. With higher premiums and deductibles, employers are looking for ways to reduce costs. One solution is voluntary benefits since they’re designed to help give employees financial protection beyond traditional major medical insurance. As health care costs continue to rise, we expect the demand for voluntary insurance to continue to increase.
Meredith Ryan-Reid, senior vice president, Group Voluntary and Worksite Benefits, Met-Life: Health care reform has driven significant interest in voluntary benefits. With the rise of high-deductible health plans, there’s a greater need and demand for voluntary benefits to provide supplementary offerings to employees. This is one reason we continue to see sales growth in voluntary benefits. Voluntary sales climbed for a fifth consecutive year, increasing by 6% in 2015, according to a recent LIMRA report.
Daniel Wray, VP – Sales, Brokerage Segment, National General Insurance Company: From the perspective of individually sold plans, the voluntary benefit market has been on the rise for several years, but the ACA has truly pointed a spotlight on this benefit category to the masses. As brokers/advisors seek to provide truly rounded benefit packages, there is no way to overlook this rapidly growing area of offerings. Voluntary benefits deliver the trinity of wins that are increasingly hard to come by in this health reform market: high-value products, affordable premiums, and fair agent compensation.
Cameron Bell, Aflac broker sales representative: Health care reform has created ever increasing gaps in the traditional medical plans. As employers shift the financial exposure to their employees, the employees are becoming more and more aware that medical insurance is not enough. As a result, a much higher percentage of employees are enrolling and/or increasing their current coverage. Employers are more open to the idea of providing a stipend to encourage employees to enroll.
2. Which voluntary benefit options are becoming more or less popular?
Danielle LaRose, Colonial Life: There’s a need for all types of voluntary benefits, depending on an employee’s family health history and situation. Nearly everyone needs life and short-term disability insurance, which are basic building blocks of protection. These products, which have been around a long time, help establish a financial foundation to support America’s workers and protect their income and lifestyles. The more recent voluntary products, such as accident, cancer, critical illness, and hospital confinement, have emerged to help fill coverage gaps in major medical insurance. With health care costs increasing, many employers are moving to plans with higher deductibles and co-pays, leaving employees with more financial exposure. We’ve seen an increase in group voluntary products during the past few years for several reasons. They’re typically simpler to enroll and administer, and they can sometimes be more affordable because of the group rate. Insurers can also make more underwriting concessions for group products, such as guaranteed issue, so all employees can take advantage of the offering, regardless of their health condition.
Daniel Wray, National General: Dental insurance was the most popular voluntary benefit in the individual market pre-reform, by a wide margin. But the past two enrollments have seen this focus change as the ACA major medical offering sales mix has shifted heavily into more front-loaded out-of-pocket costs in Bronze and Silver level plans. With this first-dollar exposure, we are seeing trends toward accident and specified disease products, with no loss of interest in den-tal plans. We have dubbed these non-dental offerings as a means to “insure your insurance” from those early $4,000 to $12,000 out-of-pocket costs that are typical of a Bronze or Silver offering.
Al Tyler, EyeMed: Vision benefits are definitely getting more popular with employees. Key drivers are the demographics as well as the fact that more workers are depending on acute eyesight. Membership in vision plans grew to 184.3 million in 2014, a 13% increase. There was also an 18% increase in the number of glasses purchased with vision benefits, according to a recent analysis of claims data by the National Association of Vision Care Plans.
Art Dammers, Anthem: We are seeing growth in Anthem’s supplemental and optional life while interest in long-term care benefits has decreased.
Stephanie Shields, Aflac: Across the board, voluntary insurance continues to grow in popularity, and has now become an essential part of a well-rounded benefit package. One plan that has been increasing in popularity is critical illness because it helps protect workers from a range of serious illnesses, such as cancer, heart attack, or stroke. Critical illness insurance offers a level of financial protection that simply isn’t available in traditional major medical coverage. If an employee doesn’t have access to the right coverage options, the financial responsibilities that come with a serious illness can make a difficult situation even worse.
Meredith Ryan-Reid, MetLife: Critical illness and accident insurance are becoming increasingly popular as employees look to purchase benefits that provide a wide variety of coverage and value. In fact, critical illness and accident insurance led the voluntary health lines in terms of sales with each increasing by double-digits for a fifth consecutive year, according to LIMRA’s 2015 U.S. Worksite Report.
Cameron Bell, Aflac broker sales representative: Critical illness and accident plans are continuing to grow in popularity. Hospital plans are not as popular due to their limited coverage.
3. Is there a particular argument for voluntary benefits that really resonates with clients?
Danielle LaRose, Colonial Life: Nearly all employers say that controlling costs is job one when it comes to their benefit package. At the same time, they face strong pressure to offer a competitive benefit program to attract and keep top talent. The benefit package is a major factor when employees decide among different employers, and replacing employees can be very costly. Voluntary benefits offer an ideal solution because they can expand the benefit package, offer more customizable options, and still control costs by allowing employees to choose and pay for the benefits they value most. Employers that are battling rising health insurance costs can reduce costs and protect their workers by adding a voluntary product that helps fill the financial gap of higher-deductible health plans. For example, the employer can increase the deductible or coinsurance to lower their major medical premium and then offer employees a voluntary hospital confinement indemnity plan to help with their increased out-of-pocket expenses. Employees can also use the benefits for non-medical expenses, such as child care, travel, and accommodations for treatment, or even mortgages and car payments. Employers can pay the premium for this new coverage or allow employees to pay the premium. Either way, the total cost for both plans is usually less than the previous health plan alone.
Tom O’Keefe, Unum: Employees tell us over and over that they want coverage options to create an insurance portfolio that meets their needs. They want choices. Voluntary benefits give employees the choices they need to help create a financial safety net straining the employer’s bottom line. Voluntary benefits help boost an employee’s understanding of their total benefit package, including the base of core offerings.
Al Tyler, EyeMed: Vision benefits are unique because they’re designed to deliver value to every person enrolled. Getting an annual eye exam is a simple, non-invasive way to safeguard what most people consider their most important sense – their vision. Eye exams can also reveal hyper-tension, diabetes, and a host of physical conditions. Once a member has had the annual exam, they generally save as much or more than their total premium for a year. But beyond that rationale, vision benefit companies need to innovate, anticipate member needs, and respond to client concerns. Vision is a dynamic part of healthcare, and the need for visual acuity is only increasing across the workforce. So, clients should expect something new, something better. Maybe it’s new online in-network providers. Maybe it’s an international solution for members who travel or work abroad. Maybe it’s a self-service tool or cost-savings feature. Vision also lends itself to transparency and ease-of-use in a way few other voluntary benefits can match.
Art Dammers, Anthem: Voluntary plans give employers a way to strengthen the value of their benefits. When communicating with employees about voluntary benefits, we use comparisons that highlight the affordability and importance of the lifestyle/paycheck protection coverage that we offer.
Stephanie Shields, Aflac: Some clients assume that they don’t need to offer voluntary insurance because they already offer major medical insurance, but there are always costs associated with health care that major medical insurance was never intended to cover. Two of the most attractive things about voluntary insurance are that employers can offer financial protection to employees and enhance their benefit cost-savings strategy. In the event of a serious accident or illness, insureds receive cash benefits that can be used to help pay for living expenses, such as rent, mort-gage payments, groceries, child care or travel, as well as un-reimbursed medical expenses. By offering voluntary insurance, employers can help protect employees from financial stress, with no direct cost to the company. So, really, the question to clients is, “Why not?”
Meredith Ryan-Reid, MetLife: It’s important to show clients how a strong voluntary benefit package can drive employee satisfaction and retention. A recent MetLife study reveals that 55% of employees want their employer to offer a wider array of non-medical benefits that they pay for on their own. Fifty-four percent are willing to pay more for a broader choice of benefits that suit their needs.
Cameron Bell, Aflac broker sales representative: Employers are understanding that accident and short term disability are effective tools to reduce workers’ compensation mods. They are also understanding that offering a full benefit package attracts and retains quality employees. Employees understand that medical insurance is limited. The idea of covering gaps is working.
4. What are some of the common objections that clients have to voluntary benefits and what is the best way to answer these objections?
Patrick McClelland, vice president of U.S. Commercial Accounts, VSP Vision Care: Sometimes, clients think that voluntary benefits don’t make as much of an impact. But we know that’s not the case. They can have a huge benefit to healthcare costs and early detection, especially vi-sion care. We know that people are more likely to get an annual eye exam than they are to get a routine physical. Because of that, an eye doctor is often the first to detect chronic disease and other health issues. A recent study by HCMS Group reveals that patients whose conditions were detected through an eye exam visited the emergency room less frequently, were less likely to be admitted to a hospital for their condition, and needed fewer medications to control their condition. Vision also provides a great return on investment. HCMS Group also found that employers saw a $1.45 return-on-investment for every dollar invested in a comprehensive eye exam through lower healthcare costs, improved productivity, and lower turnover.
Danielle LaRose, Colonial Life: A simple lack of awareness is the biggest issue. Many employers, especially in the smaller market, still don’t know what voluntary benefits are and how they can help their company. Once they understand that the value these benefits can offer to their business and their employees, they see it’s a win-win.
Daniel Wray, National General: Often, the perception on the consumer side, is that voluntary benefits are frivolous compared to their “comprehensive” ACA plan, group benefit plan, or short-term major medical plan. Education and awareness are the bedrock of better decision-making. These products must be framed as a multi-layered solution to a complex healthcare space. Out-of-pocket costs, networks, risk, and other factors contribute to the overall picture. It is incumbent upon us, as advisors, to position benefits and premiums in package terms and resist the notion that, in a post-ACA era, a health plan is an effective catch-all for all circumstances and situations.
Tom O’Keefe, Unum: Certainly over the past few years, employers have been consumed with the changes in healthcare and have not had the time to invest in understanding voluntary benefits. As the dust is settling, now is the time to show employers how voluntary plans complement their current benefits. Once employers understand the compatibility, coverage, affordable cost, and communications support, they understand the value to their employees.
Al Tyler, EyeMed: Clients don’t want to offer any benefit that is a hassle to administer. They don’t want to lose hours resolving members’ complaints or answering members’ questions about the benefit. So, it’s important to be honest about your working relationships with clients. You also need to make transparency, communication, self-service tools, and customer service top priorities. Consumers are in the driver’s seat even when the benefits are employer-sponsored. And in the exchange environment, consumers are voting directly on the benefits they value and the price they are willing to pay.
Art Dammers, Anthem: Companies are balancing the needs of their employees while dealing with tightening budgets. While face-to-face discussions about enrollment are ideal, on-site enrollment meetings are on the decline. Carriers have had success weaving in multiple enrollment strategies. A surprisingly effective combination of strategies is to offer Intranet process updates, home mailings of enrollment packets, and reinforcement education through webinars.
Stephanie Shields, Aflac: A common objection is that the employer-sponsored benefit package provides ample coverage and protection. Data is a powerful tool to help overcome objections and lend credibility to your perspective. For example, the 2015 Aflac WorkForces Report surveyed more than 5,000 employees, revealing that 88% agree, at least somewhat, that they consider voluntary benefits to be part of a comprehensive benefit package. Sixty-four percent see a growing need for voluntary benefits. Statistics like these can help turn objections into a broader conversation and encourage employers to take a second look.
Meredith Ryan-Reid, MetLife: A common objection is that voluntary benefits may overwhelm or confuse employees since it’s another layer for them to understand. But employees want these options. The key for employers is to communicate these benefits clearly and concisely to help employees understand the value of voluntary benefits and how they can make a difference in employees’ lives.
5. How do you present voluntary benefits in a way that doesn’t overwhelm employees with confusing options?
Art Dammers, Anthem: We have found it beneficial to answer questions, early in the process, about what it will cost. Enrollments using pre-populated fields on a per-pay period basis generate much higher participation, face amounts, and premium. This approach can use pre-populated personalized forms or online enrollment tools.
Danielle LaRose, Colonial Life: Enrolling in benefits should be simple, modern, and personal. It’s important for employees to understand the overall value of the benefits that their employer provides. Pre-enrollment communications, group meetings, and especially one-to-one benefit counseling sessions help employees fully understand their benefit options, where they’re covered, and where they may have some financial risk.
Daniel Wray, National General: Like most effective sales presentations, it is important to speak to the target audience in terms they understand and can relate to. Simply put, it involves telling the story instead speaking insurance-ese with acronyms that make consumers mistrust the insurance industry. Simple, logical plan selections that are tailored to the audience make the decision-making process much more intuitive.
Tom O’Keefe, Unum: Research shows that too many options can cloud our ability to make clear decisions, so the first step is to refrain from offering too many products in one year. Then carefully plan a communication strategy that helps employees understand the benefits. Information should be simple and clear and should be presented in multiple ways like e-mails, intranets, meetings, posters, and home mailings.
Al Tyler, EyeMed: It’s not about limiting options; it’s actually quite the opposite. People tell us that they want more options – different plans, different types of providers, and different ways to use benefits online. But as you expand choice, you should give members simple, user-friendly tools that help them navigate their options. Members should find it easy to put the benefit to work and feel confident about the choices they make about utilization.
Stephanie Shields, Aflac: Communication and education are key. It is important to have tools and resources that help employers educate employees on available plans, along with the details that make them relevant at various career or life stages. Benefits are personal, so it’s important to explain the ways that voluntary benefits help provide protection in a way that is as unique as the employee.
Patrick McClelland, VSP: A good strategy is to propose an alternative effective date that is different from their health insurance. This leaves more time to focus on the offering while not being overwhelmed. This strategy results in higher enrollment and satisfaction.
Meredith Ryan-Reid, MetLife: Along with clear communications, creating optimal enrollment conditions helps employees understand their voluntary benefit options without getting overwhelmed. This entails offering a variety of robust decision support resources and personalized offerings to help employees learn about their benefit options and make informed decisions about the benefits that suit their needs. Employers should provide a variety of communications tools, such as a benefit website, mobile apps, text messages, or one-on-one consultations, allowing employees to choose which resource works best for them. Regardless of age, employees, prefer personalized enrollment, such as a one-on-one enrollment process. Ranging from Millennials to Baby Boomers, data consistently shows that they value a personalized approach to meet their needs. Another key way to present voluntary benefits is to offer them “on ballot” to integrate them with core benefit offerings. This way, employees’ benefit options are in one place, reducing confusion and eliminating the possibility that employees may see one group of benefits as being more important than the other.
6. Is there an ideal number of voluntary benefits to offer?
Danielle LaRose, Colonial Life: A good start with a new client is to add two or three voluntary options to the benefit package. Research shows having too many choices actually deters purchasing. Life and disability are the basic building blocks of a financial safety net and should be offered first, if they are not already part of the benefit package. Many employers are also looking for an affordable dental product. If the major medical plan has a high deductible, a product that helps cover out-of-pocket costs, such as a hospital confinement indemnity plan, is a good fit. Then you can add additional types of coverage at each year’s annual enrollment, such as accident, critical illness, or cancer.
Daniel Wray, National General: The breadth of products available doesn’t support a simple answer to this question. Insurance is a balancing act of trading dollars for risk. Voluntary benefits open up a world of risk mitigation options. We often see voluntary benefit brokers cutting their teeth with one or two offerings; typically dental and accident programs. In our individual segment, it is not uncommon for veteran voluntary benefit advisors to offer three to four products along with a base medical insurance solution.
Tom O’Keefe, Unum: It’s best to start with two products that are the strongest complements to core coverage, followed by additional lines in subsequent years. Although employees want choice, research shows that too many choices can paralyze decision-making. So it’s best to layer offerings over time.
Stephanie Shields, Aflac: Workforce size and employee needs vary from business to business. One of the nice things about offering a broad portfolio of voluntary benefits is that employees can select the plans they need. The idea isn’t for employees to apply for every benefit available; it’s for them to have options to select the plans that help best protect them.
Patrick McClelland, VSP: No, as long as there is time to explain the value in the offering. Employees value stand-alone benefits like dental and vision. In fact, the 2016 annual Employee Perceptions of Vision Benefits survey found that eight out of every 10 people choose to enroll in employer-sponsored vision plans.
Meredith Ryan-Reid, MetLife: The number of voluntary benefits differs based on each organization’s employee needs. It’s important for companies to listen to employees, understand which benefits are highest in demand, and offer the ones that are most applicable to their employees. It is also important to offer a wide variety of benefits to reach different segments of the workforce. Employees need different voluntary benefits based on life situations, such as marriage, a first child or retirement. In fact, MetLife’s 13th Annual U.S. Employee Benefit Trends Study found a correlation between the number of benefits that an employer offers and the likelihood that an employee would recommend their company as a great place to work. At companies that offer 11 benefits or more, 66% of employees would recommend their employer as a great place to work, compared to 53% at companies that offer one and five benefits, and 46% at companies that offer no benefits.
7. What is the market like for individual voluntary benefit sales?
Danielle LaRose, Colonial Life: We’ve seen very strong growth, over the past year, especially in the public sector and smaller employer markets. The market is still largely untapped, so there’s plenty of opportunity for growth.
Tom O’Keefe, Unum: We do very well with individual short term disability and individual whole life. Whole life is a great complement to the employer-paid term base plan and voluntary buy-up term. Although term can be inexpensive, the premiums grow over time. Many people end up getting rid of it when it becomes price prohibitive. With whole life, the price is fixed from the time of purchase. It’s something that employees can take into retirement. Voluntary short term disability coverage is a nice addition to California’s short-term disability insurance or to other states where employees don’t have access to an employer paid plan.
Stephanie Shields, Aflac: Voluntary benefit options have become more popular over the past several years. They have really become a fundamental part of an employer’s benefit package. We do not see that trend slowing down any time soon with the increase in high deductible health plans (HDHPs) and a larger shift in employee cost-sharing. We also have seen a large increase in value-added services sold along with traditional voluntary policies that provide value to the insured every day, starting on the first day the coverage is in force, compared to just being there at the point of claim.
8. Are they any common mistakes you see when it comes to presenting voluntary benefits?
Tom O’Keefe, Unum: Two mistakes come to mind. First is the failure to complete a due-diligence review of voluntary offerings given the current and proposed core offerings. This includes selecting appropriate coverages and price points while considering the needs of the employee base. The second mistake is a lack of communication. Employees want and need information to evaluate the offerings with enough time to review it before making final decisions. Given diverse learning styles, communications tools should be varied and easy to understand. Not having a clear communication program and getting all parties dialed in well ahead of time can lead to frustration and poor results.
Al Tyler, EyeMed: Voluntary benefit companies (and even some clients) make premium the key deciding factor. Price matters, of course, but there are other considerations. Is it the right network? Is it not just the largest, but the right mix of retail, online and independents? Are the benefits easy to understand and use? Who’s easy to work with? Which benefits drive enrollment and utilization? Which are more appreciated by members? Do restrictions on frames and lenses jeopardize member satisfaction with a vision plan? Private exchange activity as well as our experience with multi-tier product options suggests that members will pay a bit more to get more of what they want from a vision benefit.
Stephanie Shields, Aflac: Voluntary policies are often brought in at the tail-end of a benefit conversation as an add-on or something that is nice to have. But these benefits are actually very essential in today’s health care landscape. Not only do they help employers offer more robust benefit offerings at little to no cost, but they also help employers lower costs as part of a benefit redesign strategy. For employees who bear increasing financial responsibility for health care expenses, voluntary benefits may provide the financial protection that offers peace-of-mind and helps sustain their desired lifestyle through serious illness or injury.
Patrick McClelland, VSP: A common mistake is not engaging employees and explaining the value of vision care. To achieve high enrollment, the employee must really understand “what’s in it for me.”
Meredith Ryan-Reid, MetLife: Lack of communication about the value of voluntary products is a common mistake. As benefit companies and brokers are immersed in the industry, it can be easy to forget that there is significant confusion about benefits. MetLife’s 14th Annual U.S. Employee Benefit Trends Study found that only 47% of employees agree that non-medical benefits can help them limit their out-of-pocket medical expenses. This illustrates the need for benefit managers and brokers to clearly explain the practical and financial value of voluntary products to help employees to see how these benefits can reduce financial concerns and make a difference in their lives. H
Leila Morris is senior editor for –California Broker -Magazine.