As the new year begins, continuing economic pressures have enhanced the attractiveness of voluntary benefits for both employers and employees.
For human resource and benefits departments nationwide that are charged with creating an attractive benefits package while controlling costs, voluntary benefits provide an easy way to expand the array of benefits provided through the workplace. According to MetLife’s 9th Annual Employee Benefits Trends Study, 61 percent of employees say they value voluntary benefits as a way to obtain benefits that meet their personal needs. Employees acknowledge that they save time and money when they can obtain these products through the workplace.
What is particularly noteworthy is that employers may still be underestimating the importance of voluntary benefits to their employees. The MetLife study found that 43 percent of employers do not think their employees are interested in a wider array of voluntary benefits, yet more than half of employees say they do want more of these benefits that they can choose and pay for on their own. Helping employers understand the objectives that can be realized within a well-designed voluntary benefits strategy is a tremendous opportunity for brokers and consultants in 2012.
Covering a Critical Illness
Getting an early start on introducing critical illness insurance (CII) into existing voluntary benefits packages is important as benefits education is essential for employee acceptance. According to the 2010 MetLife Critical Illness Insurance Awareness Study, only 28 percent of full-time employees said that they have heard of critical illness insurance, and among those, the majority are confusing it for health insurance, disability income insurance, or a government insurance program. However, the low levels of CII literacy and ownership presents an opportunity because once CII was fully explained, 75 percent of employees who didn’t own critical illness insurance or had never heard of it, found the concept appealing, with most even willing to pay the entire premium.
Why are the percentages so high when it comes to interest once the product is explained? It seems that many individuals are surprised to learn that their medical coverage may not address the full financial consequences of their illness, and a lump sum benefit provided by critical illness insurance can help mitigate the spike in expenses that can result from deductibles, co-insurance and uncovered expenses. Research MetLife conducted around CII found that that the average financial burden associated with recovering from cancer, a heart attack or stroke is $35,500, much of which is linked to lost income. With many employees already living paycheck to paycheck, it is not surprising that few full-time employees ― only 16 percent of those surveyed ― feel confident they could pay for a medical emergency.
Education and better communication strategies would also aid an employer’s benefits program overall as the MetLife’s 9th Annual Employee Benefits Trends Study found that just 36 percentof employees said their company’s benefits communications methods provide them with the education necessary to make benefits choices that best meet their needs.
Navigating the Legal Process
The economy has certainly brought a spike of home foreclosures, bankruptcies and debt collection woes among Americans. Even among employees not facing those more extreme scenarios, simply worrying about finances and personal legal issues in the workplace is impacting employee health and productivity. A study, “The Impact of Legal Matters on Today's Work Force” released from Hyatt Legal Plans, a MetLife company, found that people with personal legal matters – such as will preparation, traffic tickets, real estate matters, or family situations like adoption and divorce – are spending, on average, close to three hours a week at work dealing with their situation for an average duration of five to six weeks. Furthermore, 37 percent of men and 47 percent of women said dealing with their issue negatively impacted their physical or emotional health. A growing number of employees are turning to their workplace for help, and a group legal plan affords companies the opportunity to provide a cost-effective support system.
In environments where group legal plans have been available, the tough economic conditions have contributed to a surge in plan usage from 2005 - 2010. According to legal services usage tracked by MetLife’s Hyatt Legal Plans, in those five years employee usage of group legal plans doubled for home equity loans/refinancing and debt collection defense. Additionally, usage levels for debt matters increased 83 percent and bankruptcy proceedings increased 77 percent.
What other subtle benefits do group legal plans offer? The study also found that just 30 percent of employees who used a group legal plan reported taking vacation days toward resolving their legal issue, versus 50 percent who do not have a legal plan. In addition, employees who used a group legal plan resolved their issue in 4.4 weeks on average compared to 6.1 weeks for those who did not. Loyalty towards their employers is higher among those employees with access to group legal plans.
The market opportunities for group legal plans are vast ― most employers have not yet added a group legal plan to their benefits portfolio, representing a conversation starter for brokers and consultants. Adding a group legal plan option to an existing voluntary benefits package gives employers the ability to meet their employees’ desires while allaying strain caused by legal entanglements, which can increase employee productivity.
Securing an Income Stream
Challenging economic conditions have forced Americans to dip into their savings to survive, leaving them vulnerable. With a number of employees living on a paycheck-to-paycheck basis, any type of disability ― short or long term ― can have a devastating effect on their financial well-being. And what happens if that paycheck ceases altogether with a premature death of the wage earner?
Including the ability for employees to buy-up or supplement employer-paid disability and life insurance coverages on a voluntary basis helps them obtain an amount of protection that is more personalized and appropriate for their needs. The MetLife Employee Benefits Trends Study found that 54 percent of employees are interested in having life insurance available through the workplace even if they have to pay all of the costs themselves, and that percentage is even higher for disability coverage ― 58 percent. At a time when employee loyalty is dwindling, being able to help employers offer employees new benefits choices can be a step in turning that ship around.
The Year Ahead
When it comes to voluntary benefits program, the word that should be top of mind in 2012 is efficiency. Employers want comprehensive solutions aligned with controlling costs. Employees want security and safety. But perhaps above all, they want an affordable choice.
With the issue of expense shifting at the forefront in 2012, the integration of additional voluntary benefits as a strategy can help mitigate the financial concerns of employees and the financial burden on employers.