More and more benefits brokers are consolidating all voluntarybenefit options under one carrier in order to fuel topline revenuegrowth.

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This strategy does have clear value to many benefitsbrokers.

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

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That’s a strong value proposition for employers -- especiallysmaller firms that may not have a human resource team that canimplement and oversee benefits. Meanwhile, carriers promote thecost savings and administrative efficiencies of bundled voluntary,which motivates employers with restricted resources and thoselooking to stretch their benefits dollar as far as possible.

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

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

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When designing benefits, what’s good for employers may not begood for participants. Bundling provides value to the employer viaadministrative efficiency at the point of sale, but there arepotential costs to participants.

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

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

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

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Here are several considerations when deciding whether to offerbundled voluntary products.

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1) What is the carrier’s strength?

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Voluntary lines are relatively new to more well-establishedgroup health carriers – and expertise and success underwriting onetype of voluntary offering does not necessarily translate to otherlines. Brokers should be well-acquainted with the underwritinghistory of all the offerings in a voluntary bundle.

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2) What is the carrier’s bundled pricinghistory?

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Bundling may mean discounted premiums, which of course wouldcapture any employer’s or employee’s attention. But what is thepremium history for all of the voluntary options in abundled plan? Has one line experienced greater price volatilitythan another? Why? Discounted premiums lose their luster onceoffset by unexpected increases in later years.

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3) Are there limits or expiration dates on policydiscounts?

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Discounts may attract employers and participants, but they areoften followed by a premium hike shortly thereafter, no matter whatloss ratios a group voluntary policy may have. Unexpected increaseswill leave employees with a bad taste, so brokers need to knowprecisely what premium increases, if any, to expect.

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

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You get what you pay for. A bundled voluntary product thatappears inexpensive may have higher deductibles or lower benefitsthan a standalone option. That may be a reasonable tradeoff forsome employees. But those in older demographics presumably use moreservices, and may benefit more from unbundling voluntary lines ifit means they have access to the most comprehensive policy.

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

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

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It is one thing to issue a voluntary policy; it is anotherentirely to administer claims. What happens when employees usetheir bundled benefits? How does the insurer process claims? Doesit do so through one internal processing department, or does itoutsource that responsibility to a third party? Either way haspotential benefits and pitfalls.

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6) How often are claims denied?

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For each policy in a bundled package, what types of claims arehistorically denied? Claims time is when employees really careabout the application of written coverage limitations. Premium isalways an important factor, yet inexpensive policies are stillmoney wasted if they deny coverage to a consumer presumed to beunder bundled voluntary policies.

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7) What options are available?

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

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.