For employees, it's about strengthening their financial safety net and mitigating the financial exposure that still remains when experiencing a very serious illness - even though they might have health insurance and disability income protection.
For employers, critical illness is a way to enhance the appeal of a benefits program for employees - particularly if health plans are changing and employees have the potential to face larger deductibles, co-pays, and other out-of-pocket expenses in their medical plan.
Highlight opportunities
When discussing CI with clients, there are three main points to underscore:
- Adding CI to a benefits program as a voluntary offering can help employers manage their overall benefits budget, but also, as part of the larger benefits portfolio, might help improve employee benefits satisfaction and potential retention. MetLife's 8th Annual Employee Benefits Trends Study found a strong link between benefits satisfaction and job satisfaction: Of employees satisfied with their benefits, 81 percent said they also remained very satisfied with their jobs.
- The MetLife study also found 65 percent of employees thought benefits such as dental, disability and life insurance were important contributors to their feelings of loyalty toward their employer. Employers, however, are underestimating the value of these core benefits - only 39 percent of employers thought these were strong drivers of employee loyalty. It stands to reason that CI, as a complement to those other benefits, also might be a strategic driver of improved employee loyalty.
- Employees are interested in the concept of CI. A MetLife CI Awareness Study, conducted in March, found that when brokers explain the features of CI, the majority of employees become favorably disposed to purchasing the product - even if they have to pay 100 percent of the premium.
However, to effectively capitalize on these opportunities, one first needs to overcome the challenges. The primary challenge is that CI, a relative newcomer in the group benefits space, is still not widely known. The MetLife CI Awareness Study found that about three-quarters of full-time employees surveyed have never heard of CI.
Of those that said they had, the vast majority were actually confusing it for health insurance, a government insurance program or disability insurance. Executing an effective education and communication campaign is vital for the successful implementation of this product.
Effective communication vital
Even beyond CI, there is a fundamental business value to improving benefits communications. MetLife's 8th Annual Employee Benefits Trends Study highlighted the correlation between effective benefits communications and improved benefits satisfaction, and, in turn, improved job satisfaction. The following statistics illustrate the differences:
Among those employees who strongly believe their employers' communications effectively educates them about their benefits, eight in 10 also were satisfied with their benefits as well as satisfied with their jobs.
However, only one in 10 employees who didn't see their benefits communications as effective were satisfied with their benefits and just three in 10 were satisfied with their jobs. People who understand their benefits offerings and how they are relevant for their lives are more likely to use them - increasing the value of the benefits program not only to themselves but also to their employer. Sounds like common sense, but the reality is that the MetLife study found only about one-third of both employers and employees currently believe their benefits communications are effective.
A good starting point for improving communications is to create the correlation for employees between their benefits offerings and their financial concerns. In other words, illustrate how financial protection benefits are relevant in building a strong personal safety net and providing peace of mind. On-going communications can also help reinforce the employer's commitment to employees and strengthen employee engagement in the benefits program. Keeping the message simple and materials straightforward and focused on the value to the individual can all contribute to greater success.
When you also keep the product simple, messaging can be easier to deliver. Making it as easy as possible for employees to understand what the product covers and how they can use it can make them most receptive to participate. Eliminating ongoing claims paperwork by providing a lump sum benefit payment that can be used by employees for anything they choose not only makes the entire process less complicated but also provides maximum flexibility.
For instance, those surveyed for the MetLife CI Awareness Study overwhelmingly said if they were confronted with a critical illness and received a lump sum payment of $10,000 they would use it to pay out-of-pocket medical expenses that would exist despite having medical coverage as well as use the money for paying typical household bills like a mortgage, rent and utility bills. With a lump sum, employees get to decide how they want to use their benefit.
Filling a need
Employees are ill prepared to deal with the financial impact of a critical illness such as a heart attack or stroke. For example, among full-time workers:
- 55 percent are somewhat or extremely concerned that a critical medical condition could impact the financial well-being of their families.
- Only 27 percent feel very confident that their rainy day fund could handle a financial emergency.
- About two-thirds say they have less than three months of savings available for a medical emergency.
- Nearly half (46 percent) of those surveyed have less than $5,000 available to them to cover expenses for a major illness - and more than half of these have less than $500 available.
Let's emphasize that last point. An employee with a critical illness may be struggling financially even though the employer has provided a medical plan as well as disability coverage. That's because of the spike in out-of-pocket expenses that can be associated with a critical illness while simultaneously facing a potential reduction in income from being unable to work. For example, there are health insurance deductibles, co-pays, prescription drug costs as well as potential travel expenses, child care and house-keeping arrangements needed that may need to be paid from reduced financial circumstances (even with some level of disability coverage in place).
Employers also can be affected if their employee remains healthy but is caring for someone recovering from a critical illness and worried about their financial situation. According to MetLife's Employee Benefits Trends Study, many employers do recognize the impact that employees' financial concerns may have on their company's bottom line in lost productivity costs. Almost two-thirds (65 percent) of employers believe that employees are less productive at work when they are worried about personal financial problems, and more than half (52 percent) believe that absenteeism increases when employees are dealing with personal financial issues. Offering access in the workplace not only to CI for the employee but for their family members could be a proactive step in this regard.
Complementing coverage
Covered CI conditions typically include cancer, stroke, heart attack, major organ transplant, kidney failure and coronary artery bypass graft. While these medical conditions can be life-threatening, survival rates are increasing. In other words, employees who are living through these conditions are also likely to be a growing number of an employer's long-term disability claims.
For instance, while the incidence rate of group cancer claims that MetLife has received over the last several years has remained relatively flat - about 12 percent of all LTD claims received - duration rates are increasing.
For example, duration rates for LTD claims related to breast cancer have increased from 16 months in 2006 to 21 months in 2009, and pancreatic cancer claim durations have increased from 11 months to 20 months during that time period. MetLife has seen an annual increase of roughly 7 percent to 8 percent in the volume of open long-term disability cancer claims over the last four years. These statistics indicate that advances in medical detection and treatment are improving survival rates.
MetLife's claims database also indicates that the percentage of cancer claimants working part-time while receiving disability benefits increased by 15 percent to 20 percent over the last four years. However, while a growing number of employees with cancer might be physically able to return to work on at least a part-time basis, the financial recovery might be a much longer process without the full complement of medical, disability and CI coverage working together for the strongest safety net. CI should be positioned as a complement to these other core coverages, not a replacement.
Another area where disability, medical and CI coverage can work together is in the realm of wellness and disease management. For example, at claim intake the disability carrier should be able to provide employees with a warm transfer and/or referrals to disease management specialists provided through the employer. This process ensures employees who have a critical illness (as well as other conditions) are aware of valuable resources that might help them manage their illness.
Wellness programs can be designed to help with prevention. The number of employers offering wellness and disease management programs remains an underappreciated area. More than one-third of larger employers (those with 500 or more employees) still do not have a wellness program in place and about two-thirds say they do not have a disease management program. A key motivator for employees to participate in wellness programs is the desire for good health - an outcome that's also advantageous to employers.
