More and more benefits brokers are consolidating all voluntary benefit options under one carrier in order to fuel topline revenue growth.

This strategy does have clear value to many benefits brokers.

“A lot of employers want to keep their benefits program as simple as possible to manage,” said Susan L. Combs, CEO and founder of the New York City-based benefits brokerage Combs and Company. “Dealing with one carrier for all voluntary options makes administering a benefits program easier for a lot of employers.”

That’s a strong value proposition for employers -- especially smaller firms that may not have a human resource team that can implement and oversee benefits. Meanwhile, carriers promote the cost savings and administrative efficiencies of bundled voluntary, which motivates employers with restricted resources and those looking to stretch their benefits dollar as far as possible.

Brokers can best serve their bottom lines with value-driven options and services for clients and workforces. Clearly, in order to compete and grow, it’s incumbent upon brokers to understand when and how a bundled option can best serve all interests.

But there is a problem with brokers and agents competing solely on price and administrative facility: the risk of limiting their marketing initiative to bundled voluntary options.

When designing benefits, what’s good for employers may not be good for participants. Bundling provides value to the employer via administrative efficiency at the point of sale, but there are potential costs to participants.

If all carriers’ voluntary products were the same, the decision to bundle would be an easy one. But that’s simply not the case in the voluntary market. Instead, competition encourages more carriers to offer products and different price points along with varying levels of service, coverage and provider access.

In effect, voluntary products are becoming less of a commodity, and the caveat “you get what you pay for” is becoming more descriptive of the market. A discrepancy in price, in other words, often means a discrepancy in product.

Whatever ultimately encourages employers to bundle voluntary products, they should be able to make an informed decision. That guidance falls on the shoulders of brokers, who may be tempted to bundle a voluntary line to just to expedite a sale.

Here are several considerations when deciding whether to offer bundled voluntary products.

1) What is the carrier’s strength?

Voluntary lines are relatively new to more well-established group health carriers – and expertise and success underwriting one type of voluntary offering does not necessarily translate to other lines. Brokers should be well-acquainted with the underwriting history of all the offerings in a voluntary bundle.

2) What is the carrier’s bundled pricing history?

Bundling may mean discounted premiums, which of course would capture any employer’s or employee’s attention. But what is the premium history for all of the voluntary options in a bundled plan? Has one line experienced greater price volatility than another? Why? Discounted premiums lose their luster once offset by unexpected increases in later years.

3) Are there limits or expiration dates on policy discounts?

Discounts may attract employers and participants, but they are often followed by a premium hike shortly thereafter, no matter what loss ratios a group voluntary policy may have. Unexpected increases will leave employees with a bad taste, so brokers need to know precisely what premium increases, if any, to expect.

4) Does a group’s demographics need richer coverage than a bundle can offer?

You get what you pay for. A bundled voluntary product that appears inexpensive may have higher deductibles or lower benefits than a standalone option. That may be a reasonable tradeoff for some employees. But those in older demographics presumably use more services, and may benefit more from unbundling voluntary lines if it means they have access to the most comprehensive policy.

The group’s general compensation base is another consideration. Lower earners may value the cost benefits of bundling and use it as a rationale to enroll. Other groups will have more out-of-pocket dollars to spend on benefits come enrollment season.

5) What are the policies’ utilization rates, and how does the carrier process claims?

It is one thing to issue a voluntary policy; it is another entirely to administer claims. What happens when employees use their bundled benefits? How does the insurer process claims? Does it do so through one internal processing department, or does it outsource that responsibility to a third party? Either way has potential benefits and pitfalls.

6) How often are claims denied?

For each policy in a bundled package, what types of claims are historically denied? Claims time is when employees really care about the application of written coverage limitations. Premium is always an important factor, yet inexpensive policies are still money wasted if they deny coverage to a consumer presumed to be under bundled voluntary policies.

7) What options are available?

The option of bundling voluntary products with one carrier is clearly worth considering, but brokers would be wise to broaden their growth potential by broadening their choices. Make sure benefits decision-makers are aware of the value and limitations of bundling in order to leverage the strategy’s potential.

Instant Insights /

Voluntary benefits: To bundle or not to bundle, that is the question

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