"How would you like to pay for your benefits?"
That's a question no one is asking but everyone will hear eventually. As employees buy coverage through the state and federal exchanges they'll no longer have access to their traditional payroll deductions.
In other words, they'll be getting bills at home. As employers (your clients) drop traditional coverage and send their employees to the exchange, they'll be removing the most significant part of benefit financing employees have counted on for years, payroll deduction. The question is: What does this mean for you?
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What we know:
- 55 percent of employees feel payroll deductions for voluntary benefits help them to be more disciplined about saving. This discipline – coupled with the financial safety net the benefits provide, and an integrated education campaign – can translate into increased enrollment, according to a 2013 MetLife Survey.
- Payroll deduction participation ranges between 25 percent and 45 percent for most products but on direct pay, the rates tend to be in the single digits. – Eastbridge Consulting Group – June 2013
- The average American bounces 12.7 checks a year, which generates $9.4 billion in bank fees. – Compilation American Banker 2012
- The Average Pennsylvania checking account balance is $3,100. This would be depleted in less than one year. The average savings account in Pennsylvania is only $6,100. – Pitney Bowes 2012
The challenge will be to not only enroll individual employees on exchange or voluntary products in a post-payroll deduction world but how to maintain persistency in those cases. According to a joint study sponsored by LIMRA International and the Society of Actuaries, "Every check a policyholder/customer has to write provides him or her another opportunity to reconsider the purchase decision."
If employees aren't saving enough at home and continually struggle to budget their finances, how are they going to manage new health insurance and voluntary bills coming to their home each month? What can you do to ensure that the time you spend enrolling individuals doesn't go down the drain when they pay their premiums late or not at all? Will carriers still pay you?
In this new age of health insurance delivery, it's no longer possible to sell and forget; you have to find ways to increase your persistency and ensure that employees not only buy the benefits you're selling but hold on for them for years to come.
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