EXPANDING FLEXIBILITY, BUILDING LOYALTY

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1 Sub-nomenclature MARCH 2015 VOLUNTARY BENEFITS EXPANDING FLEXIBILITY, BUILDING LOYALTY CONTENT: 2 EXAMPLES OF VOLUNTARY BENEFITS 3 A POPULAR OFFERING 3 EDUCATION IS KEY 4 THE TOTAL WORKER HEALTH APPROACH 4 THE RESOURCES YOU NEED

2 MARCH 2015 As the employee benefit landscape continues to evolve, with health care reform pushing some changes and the trend of more consumer involvement and decision-making continuing to grow, voluntary benefits are getting more attention. Voluntary benefits are not a new idea: there is a longstanding practice of offering additional insurance products to employees, who pay for the coverage fully but benefit from lower rates available through employers who offer the plans. In today s world, with consumers becoming more cost-conscious and employers scaling back Cadillac -type plans that offered very generous benefits, the need for a more nuanced approach has grown. The mandates of the Affordable Care Act and the rise of high-deductible plans have created a large population of buyers who have incentives to choose consumer-driven plans that feature more cost sharing. In many cases, these consumers are well-served by these plans, with their relatively lower premiums and good coverage of preventive care. However, there is no denying that consumers are taking on more risk with such plans. Employers who offer the option of additional insurance products to cover high-cost illnesses, disability, or other expensive events will be providing a much-needed, and much-desired, service to their employees. SURVEY SAYS According to a recent MetLife survey: 64% of employees were interested in having more voluntary benefits options through their employer 60% of employees said they re willing to pay more for benefits for more choices 65% of employees said having benefits customized to their needs would increase their employer loyalty EXAMPLES OF VOLUNTARY BENEFITS There is a wide range of products available under the voluntary benefits umbrella, but some of the most common are: accident insurance, short-term disability insurance, critical illness insurance, and hospital indemnity insurance. Accident insurance helps employees with the many additional costs that can come with any type of accident, from minor injuires to a more serious accident. These can include out-of-pocket medical costs, the temporary loss of income from being unable to work, and the day-to-day living expenses that can be higher when someone is injured and their daily routine is no longer possible. Short-term disability insurance takes this concept a step further, recognizing that a disability, especially to a primary wage earner, can be devastating to a family s finances. Short-term disability insurance (sometimes called paycheck insurance ), which in some cases can pay benefits for up to 24 months, can give employees financial security while they recover from or learn to cope with a serious disability. Critical illness insurance provides benefits for those diagnosed with any number of critical illnesses, such as heart attacks, strokes, cancer, etc. The coverage helps with not only the 2 Voluntary Benefits: Expanding Flexibility, Building Loyalty

3 high medical expenses, but provides security so that enrollees can focus on their health rather than worrying about finances. Hospital indemnity insurance is another product that provides help with high-cost health scenarios, in this case, the expenses that come with hospitalization. As many medical benefit plans move to higher deductibles and co-pays, a supplemental insurance plan such as hospital indemnity insurance can ease the pain of a costly hospital bill. A POPULAR OFFERING A recent MetLife study found some interesting data on how employees view voluntary benefits. In the survey, 64 percent of employees said they were interested in having their employer provide a wider array of voluntary benefits. Sixty percent said they would bear more of the cost of their benefits in order to have more choices. And 65 percent said having their benefits customized to meet their needs would increase their loyalty to their employer. All of these three items drew a significantly more positive response in 2013 than in 2012, by about a 10 percent margin. And increasingly, those who study employee benefits are finding that many employees are accepting of an opt-out approach. With opt-out, some voluntary benefits, such as disability insurance, may be included in a basic benefits package, with employees have the option of declining the products, but not needing to seek them out. Many companies are moving to auto-enroll for 401K plans, based on the experience of other companies who find their employees are quite satisfied with that arrangement, since they can opt out at any time. And in many cases, employees are grateful to find they have the option of a benefit such as short-term disability when they come to need it. EDUCATION IS KEY The days of employees simply accepting benefits without asking questions are probably over. Increasingly, and especially with younger employees, workers are seeking out education on their benefits and valuing approaches that allow for customization and flexibility. Increasingly, and especially with younger employees, workers are seeking out education on their benefits and valuing approaches that allow for customization and flexibility. Studies suggest that good benefits packages increase employee loyalty, but employees who are not engaged are less likely to feel loyalty to their employer. In many cases, even limited health plans meet with employee satisfaction, if they have good information and understand the benefits and limitations of their plan. If a worker feels a company cares about educating its workforce on things like benefits, that employee is much more likely to feel like part of the team. A strategic education and communication plan will allow an employer to show workers the value of their benefits, as well as help them understand what benefit strategy will work for them and their family, no matter how it s delivered. Marsh & McLennan Agency 3

4 MARCH 2015 THE TOTAL WORKER HEALTH APPROACH As many have discovered, a total-worker health approach to benefits has tremendous upside for employers and employees. In the case of voluntary benefits, employees who feel their workplace offers them options to cover whatever life may throw at them gain valuable peace of mind. Voluntary benefits provide protection from many of workers most pressing fears... Voluntary benefits provide protection from many of workers most pressing fears: what a disability would mean, how they would take care of their family if they were ill and unable to work, and the security of knowing the family s savings aren t at risk if something bad happens. For many employees, this peace of mind contributes directly to their productivity and engagement at work. Worried employees are distracted employees, and the possible negative outcomes associated with a distracted workforce are obvious. THE RESOURCES YOU NEED Your employee benefits broker or advisor has experience in walking employers through the many approaches to voluntary benefits. Although flexibility is valued by employers and employees alike, too many options can be overwhelming, and that s where an experienced employee benefits advisor can help. He or she will have the expertise needed to help find the right fit for voluntary benefits for employees in your organization. For more information, talk to your Marsh & McLennan Agency representative or contact: Kyleen Engelstad Voluntary Benefits Consultant ext engelstadk@rjfagencies.com DISCLAIMER This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change. 4 Voluntary Benefits: Expanding Flexibility, Building Loyalty

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