By Richard D. Bryer, Sr.
Voluntary benefits provide a great way for employers to offer their employees benefits without incurring the direct cost of buying benefits for everyone. The benefits landscape has changed and is changing rapidly. Rising healthcare costs, healthcare reform, older employees and changing family needs are influencing the way employers look at their benefits. Cradle to grave benefits are a thing of the past. Employers are faced with very tough decisions when it comes to benefits and the cost of providing them. They need to remain competitive, but also spend benefit dollars wisely.
The biggest thing driving benefit decisions is healthcare. Healthcare remains the number one concern for employers and employees. Employers and brokers have struggled with effective ways to curve the costs of healthcare. Wellness programs, claims management and self-funding arrangements are among a few ways that have been implemented. However, employers are continuing to make drastic changes to their healthcare plan to keep it affordable. The result of these changes are more employees are left with increased exposure in the form of higher deductibles, co-pays and cost sharing. With these increased costs, employees are left with increased gaps in their benefit package.
In addition, because of increasing healthcare costs; employers are faced with decisions on the other company paid benefits provided to employees. Benefits like short term disability, long term disability, life benefits and retirement. Employers are dropping these benefits, or reducing the level of coverage in order to keep pace with the rising healthcare costs. This also leaves gaps in the employee’s benefits and exposes them to additional out-of-pocket costs. Are there any other solutions to this dilemma?
One strategy that employers are pursuing is to offer their employees voluntary plans to help fill the gaps that are left behind due to changes made in the medical plan. This strategy shifts the responsibility of insuring an employee’s personal insurance needs to the employee. Employees can customize plans that fit their own personal needs.
There are many different types of plans that an employer can offer their employees. Each plan fits a specific need and plans can be tailored to each employer’s specific needs. Listed below are some plans:
- Short Term Disability – Provides employees with an income replacement benefit for periods of 3, 6, 12 or 24 months.
- Long Term Disability – Provides employees with income replacement benefits to age 65.
- Life Insurance – Offers employees choices between temporary or permanent life options.
- Cancer Insurance – Helps employees with the indirect expenses related to cancer treatment.
- Accident Insurance – Provides employees with payments to help off set medical bills, lost wages or out-of-pocket costs.
- Critical Illness Insurance – Helps with the costs associated with treating a major illness such stroke or heart attack.
- Medical Gap Coverage – Helps employees with deductibles on high deductible health plans.
- Legal Insurance – Provides basic legal services for employees.
Voluntary Benefits offers the employees a number of advantages:
- Employees have a broad choice of plans that can be tailored to their personal needs.
- Employees receive modified underwriting and guaranteed issue coverage options.
- Employees receive the convenience of payroll deduction.
- Benefits are portable.
- Most coverage’s provide benefits for dependents.
- Some plans can be purchased through the company’s cafeteria plan.
- Rates for these products are far more stable than premiums for medical.
- Some plans are guaranteed renewable for life.
- Pricing on these products may be far less expensive as opposed to the retail insurance market.
Voluntary Benefits offers the employer a number of advantages:
- There is no direct benefit cost to the employer. Most plans do not require an employer contribution.
- Employers can offer as many or as few of the options as they choose.
- There is very little administration on the employer’s behalf if plans are set up correctly.
- Offering these plans can help with retention and turnover issues.
- Employers use these plans as a recruiting tool for employees.
- These plans genuinely help employees with their out-of-pocket expenses. When employees use these plans and claims are paid, there is a feeling of good will and morale among the employees.
There are many carriers that offer these types of products. Some carriers spend a lot of money marketing their products, while others choose marketing through direct agents. What is important to know is that the quality of a carrier’s products is not measured by the amount of advertising it does. It is a good idea and prudent to have a Voluntary Benefit Consultant or Professional Enrollment Firm provide you with a thorough product analysis. More experienced firms will be able to show you the difference between the products, policy, delivery and service. A thorough analysis will objectively reveal each carriers strength and weakness so you can make an informed decision for your employees.
In summary, Voluntary Benefits provide a win-win for the employer and employees if implemented professionally. Employees like having choices in their benefit options, and employers like the cost effectiveness of offering these plans. None of us know what healthcare will look like down the road. One thing is for certain, voluntary plans will provide the safety net that employees will need and the mechanism for employers to provide it!
Richard D. Bryer, Sr. is President of Worksite Benefits Group. For more information, visit www.worksitebenefitgroup.com.
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