The voluntary benefits market continues to evolve, but therecould be even more significant changes in the future as productsrespond to broader upheavals.

Single payer and voluntary's role

On the top of the list of major shifts: the possibility, howeverremote, of a move to a single-payer health caresystem in the U.S. Even if such a drastic changeoccurred, there would still be a role for voluntary benefit products, asany such system would likely be similar to those in Canada andJapan, in which copays and deductibles are still required.

|

“Even if the U.S. adopts a single-payer system, the needfor voluntary benefits would become even more robust, becausepeople will still have out-of-pocket costs and supplemental planscan help cover those costs,” says Ben Bohonowicz, director ofclient services at Employee Benefit Services of Maryland Inc. inBaltimore. “People think if we adopt a single-payer system, brokerswill go away, but that won't be the case.”

|

Dan Lebish, executive vice president and chief operating officerat Aflac Group in Columbia, South Carolina, says that scenariomirrors much of Aflac's experience in Japan.

|

“Analysts predicted that the introduction of a national healthcare system would be the demise of Aflac, but just because thegovernment was providing health insurance to folks, it couldn'tcover everything — there were non-covered services anddeductibles,” Lebish says.

|

Tom Wagoner, president of Accelerated Benefits in Columbus,Ohio, believes the U.S. could “absolutely” adopt a single-payersystem, but says carriers would then respond to new needs, such asdeveloping a comprehensive gap product similar to Medicaresupplements, or products that would enable individuals to improvetheir positions in line for treatments.

|

“This could become very important, as there's going to be a realsqueeze, with not enough providers and doctors for the amount ofpatients within the system,” Wagoner says.

Emergence of health advocates, enrollment companies,and other third-party facilitators

Another significant change that is already starting to occur isthe emergence of third-party firms to help employees navigate thegrowing number of benefit options.

|

Perhaps the biggest “aha” moment in this year's MetLife EmployeeBenefit Trends Study was the finding that employees are overwhelmedwith the amount of choices they have and they are looking to theiremployer for help, says Todd Katz, executive vice president, group,voluntary and worksite benefits at MetLife Inc. in New YorkCity.

|

“We have a big gap between how brokers and employers perceiveemployee understanding and what employees really understand aboutbenefits. And the gap is pretty much entirely driven by the waybenefit programs are communicated,” Katz says.

|

Indeed, two-thirds of employees responding to MetLife's surveydid not find benefit communications easy to understand. Thissuggests traditional channels used by brokers and employers likelyaren't going to meet employees’ needs anymore, he says.

|

“Today, smart brokers and smart employers are partnering withmore innovative firms, whether they are carriers or enrollmentfirms that have expertise in communicating benefits,” Katz says.“Also, more and more employees want different avenues for benefitscommunication, such as call center or face-to-face support, inorder to get information in ways that best fit them.”

|

Charlie Leatham, vice president at Hays Cos. in Minneapolis,says that as employees become more educated, they will be morelikely to purchase additional coverages, creating sustainable ratesand plans.

|

“When adverse selection is removed, product price points arelowered, thus keeping more healthy risk on the plans,” Leathamsays.

|

He also believes communication will continue to move away fromemployers’ human services departments to outside services. Thismight be a health advocate, or another type of third-party firmthat helps navigate between the employer and the carrier, providingtools for access and decision making.

|

“I think it's important that the concierge services be somewhatindependent, so the employer group can change their medical anddental carriers without disrupting the communication service thatrelays the message,” Leatham says.

|

Michael R. Nadeau, founder of Viverae Inc. in Dallas, believesthat wellness providers have the best opportunity to be a hub forinformation across the entire spectrum of benefits, becausewellness programs are rooted in education and awareness. Suchproviders can partner with other voluntary benefits vendors forthings like preventative care and chronic condition management, todrive utilization of an employer's overall voluntary benefitsstrategy.

|

“The wellness piece is what brings it all together on aconsistent basis,” Nadeau says. “The utilization of voluntarybenefits will become greater when they are integrated witheverything else, compared to if they were a standalone product.”

More innovative offerings

Carriers are also responding to the increasing needs ofindividuals trying to deal with more complex systems. For example,Aflac is now offering value-added services such as a healthadvocate to help individuals navigate the health care system, and abill negotiator to help lower their out-of-pocket costs forexpenses, including those not covered by Aflac's insurancepolicies, and telemedicine, Lebish says.

|

Carriers will also increasingly specialize in certain voluntaryproducts in response to a rising demand for best-of-breed options,as more brokers offer clients a wider selection of products frommultiple carriers, says Phoenix-based Nick Rockwell, seniorconsultant at Eastbridge Consulting Group Inc. in Avon, Conn..

|

Currently, brokers with limited experience often use a singlecarrier's bundle because they perceive it may be easier, he says.While bringing in multiple carriers requires more orchestration, asbrokers become more comfortable, they will begin to sell unbundledproducts.

|

“If that trend continues, in three to five years it's possiblethat comfort level will reach a level in the market where a truebest-of-breed product selection will become more commonplace,”Rockwell says. “As a result, we’ll get a lot more productcompetition among carriers. We may also see carriers meet thistrend by specializing or focusing on distribution of those productsthey feel they are truly best at.”

|

Wagoner expects carriers will develop more plans forcatastrophic conditions such as violence conducted at protests orin acts of crime, as well as acts of war—including even nuclearwar. There will also be more specialized policies for more unualrisks that are currently excluded in standard policies, such aswingsuit flying.

|

Companies outside of the traditional insurance industry willcontinue to develop products to help individuals, such as privatemedical centers that are much less expensive than urgent carecenters that typically charge anywhere from $75 to $250, he says.For example, Walmart and CVS might launch clinics that charge muchlower fees to receive treatments for common ailments such as colds,flus, ear infections and lacerations.

|

“Voluntary benefits could play a part in this, as there could bepayroll deductions for say, $50 a month, for unlimited visits tosuch clinics,” Wagoner says. “I think very soon, you will seeWalmart get into the insurance business with a capitation fee or afixed fee for unlimited visits for your family to their healthcenter.”

|

Health savings accounts and flexible savings accounts shouldalso be viewed as voluntary benefits, says Martin Trussell,executive director at ECFC, a Washington, D.C.-based nonprofit forthe education and advocacy of account-based health plans.

|

Such plans offer significant tax savings when dollars are setaside for future medical care, he says. However, these accountswill be impacted by the Cadillac Tax, which will count employeecontributions to these accounts towards the thresholds that willtrigger the 40 percent excise tax on high-cost benefit plans.

|

“In order to allow Americans to plan and pay for their healthcare needs moving forward, Congress will need to take a seriouslook at the effects this tax will have,” he says.

|

More individuals who have qualified medical plans will likelyopen such savings accounts if they also buy supplemental plans tohelp cover deductibles and other out-of-pocket costs, Trussellsays.

|

“That represents a big opportunity for benefits advisors andemployers in providing the right account-based plan, and thenpairing the underlying health plan with existing voluntary benefitproducts available in today's market,” he says. “However, a word ofcaution: Advisors must be careful when matching voluntary benefitsproducts with a qualified HSA health plan. It would be very usefulto first know which carrier's voluntary products meet the minimalrequirement to be HSA-compatible.”

|

Bohonowicz says that some carriers are now combining criticalillness, cancer, hospital indemnity and accident plans, simplifyingtheir products “so there will be less employee confusion.”Voluntary plans will also begin to cover more services likepreventative care, “to get people to do the things they should tolower health care costs.”

|

“In fact, some benefits even pay people money, say $50, to getan annual physical,” he says. “Carriers will increasinglyincentivize people to do these things so they’ll be less likely tohave catastrophic events, like hospitalization.”

|

Telemedicine will become increasingly popular, as more employeesseek inexpensive care for commonly-diagnosed illnesses, Bohonowiczsays. But soon it won't be a standalone coverage, as most medicalcarriers will start to bundle it to achieve cost efficiencies.

|

Employers will offer even more innovative perks as core benefits“continue to be watered down,” in an effort to remain competitive,he says.

|

“Adding concierge services will play a heavy role in that:offering to pay for childcare services, lawn cutting — anythingthat pulls people away from work,” Bohonowicz says.

|

Nontraditional legal plans and identity protection plans arealso on the rise, Rockwell says. One reason for this is thatvoluntary benefits brokers and brokers that traditionally just soldemployer-paid benefits are now both selling these products. Anotherreason is that more employers are offering them.

|

Donald A. Rowe, vice president of employee benefits at LegalClub of America in Sunrise, Florida, said such plans are part ofthe growing awareness of “financial wellness.” Benefit offeringsnot only include group legal and identity theft plans, but alsofinancial literacy programs, payroll purchase plans, and payrolladvance/lending plans, among other programs.

|

These types of programs, combined with physical wellnessprograms, are designed to create a physically healthy employee whoshows up for work in both good physical shape and good financialshape, Rowe says.

|

“Employees who fit in this category are more productive and morelikely to meet or exceed employer expectations,” he says. “As timegoes on, both of these types of wellness programs, physical andfinancial will become more the norm in the benefits landscape.”

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Katie Kuehner-Hebert

Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.