The days of employer-paid benefits are disappearing faster than a snow cone in July — especially when you consider that most companies are not helping to offset the costs for much more than major medical and physician care for their workers. And, the sticker shock for premium increases has just barely begun. Just wait until 2015! However, in spite of increased health care costs, voluntary benefits are still popular even if employees are left to pick up the tab.
A new study reports that 65 percent of employees say it's important that their employer offer these products. However, 47 percent of employees surveyed haven't been offered an additional voluntary product since the Patient Protection and Affordable Care Act was implemented in 2010. These statistics were derived from an online nationwide survey recorded by Harris Interactive on behalf of Transamerica Employee Benefits, a marketing unit of Transamerica Life Insurance Company.
“Employee benefits are one of the most important factors in recruiting and retaining good employees. A robust package that includes voluntary products helps employers acquire and retain a talented, productive workforce,” said Randy Clarkson, TEB president. “This is especially true now with the diverse needs of employees.” According to TEB, the voluntary products becoming increasingly more important due to health care reform include critical illness, accident, supplemental medical expense, hospital indemnity and cancer, and dental and vision policies.
According to the U.S. Census Bureau, 98 percent of employers in the United States have fewer than 100 employees, accounting for approximately 35 percent of the U.S. workforce and representing about 40 million workers. But many employers don’t offer voluntary benefits, according to a 2013 LIMRA study. The study found that, among small businesses that do not currently offer benefits, 6 in 10 are unfamiliar with voluntary products, providing an opportunity for carriers and producers to educate small employers on the advantages of offering voluntary benefits to their employees.
And, research indicates that — depending on the benefit — most employees prefer to purchase their benefits through the workplace. Those who favor purchasing benefits at work cite convenience, the ability to pay through payroll deduction, and less perceived need for background research as top reasons for this preference. What a gold mine for brokers!
Employers use voluntary plans to offer employees dental, vision and life insurance at group rates, which are lower than what employees would pay if they purchased these plans on an individual basis. Voluntary plans offer many benefits to both the employee and to the employers. Here are five of them:
1. They can fill in the gaps of a limited employee benefits package. If benefits are currently limited to health and dental, adding additional insurance would help address other employee needs. Some health plans may not provide coverage for eye exams or eyewear. A voluntary vision plan would fill this need and help preserve eyesight. Employees can purchase more life insurance if a voluntary plan is offered alongside an employer-sponsored life plan.
2. Pre-taxed dollars can be used to pay for these plans. The cost of voluntary plans can be conveniently deducted from paychecks with pre-tax dollars (FSA/HSA/HRA), which can help employees save on their purchase. Using these vehicles to pay for qualified medical expenses — dental exams, prescription medications, eyewear and exams — is a great way to increase savings and value.
3. Offers desirable benefits and gives employees a reason to stick around. Employees value benefits like dental and vision. According to Taylor Nelson/Sofres Intersearch, 80 percent of Americans surveyed felt dental benefits are “very important/somewhat important” for hiring employers to provide employees. Employers who offer a variety of benefits look more attractive to current employees and to new hires, and this can help encourage company loyalty by increasing employee satisfaction.
4. Encourages preventive care. Employees who have dental benefits get dental care more compared to those who do not have dental insurance. According to a National Association of Dental Plans Consumer Survey, people who do not have dental coverage are 2.5 times more likely to not visit their dentist. Bad oral hygiene can be very costly as oral infection has been tied to cardiovascular disease, diabetes, low birth weight in newborns, Alzheimer’s, HPV and more.
Vision plans also are an important prevention tool. Signs of disease such as high blood pressure, glaucoma, and diabetes may be caught early in an eye exam. Early detection from an eye or oral exam can help lower a company’s medical costs in the long term.
5. Protection for families during the event of a death or serious injury. Group term life insurance provides an inexpensive way to have money available during the event of a death. Most term life policies include accidental death and dismemberment, which provides a benefit in the event of a serious injury or death due to an accident. By having both benefits, depending on the plan selected by the employer, can help financially protect a family from a diminished household income… and provide peace of mind. Financial wellness is a great voluntary benefit.
Voluntary benefits are hot, and they are only getting hotter. With PPACA looking at only medical care, your clients and their employees are looking to you as their broker to help them figure out all this mess and be the hero you are meant to be. It’s high time to help your clients gas up, get down the road, and get their benefits on. And hurry — the summer selling season is coming fast. As they say in Texas, “Cowboy up!”