The voluntary benefits market continues to evolve, but there could be even more significant changes in the future as products respond to broader upheavals.

Single payer and voluntary's role

On the top of the list of major shifts: the possibility, however remote, of a move to a single-payer health care system in the U.S. Even if such a drastic change occurred, there would still be a role for voluntary benefit products, as any such system would likely be similar to those in Canada and Japan, in which copays and deductibles are still required.

“Even if the U.S. adopts a single-payer system, the need for voluntary benefits would become even more robust, because people will still have out-of-pocket costs and supplemental plans can help cover those costs,” says Ben Bohonowicz, director of client services at Employee Benefit Services of Maryland Inc. in Baltimore. “People think if we adopt a single-payer system, brokers will go away, but that won't be the case.”

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

“Analysts predicted that the introduction of a national health care system would be the demise of Aflac, but just because the government was providing health insurance to folks, it couldn't cover everything — there were non-covered services and deductibles,” Lebish says.

Tom Wagoner, president of Accelerated Benefits in Columbus, Ohio, believes the U.S. could “absolutely” adopt a single-payer system, but says carriers would then respond to new needs, such as developing a comprehensive gap product similar to Medicare supplements, or products that would enable individuals to improve their positions in line for treatments.

“This could become very important, as there's going to be a real squeeze, with not enough providers and doctors for the amount of patients 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 is the emergence of third-party firms to help employees navigate the growing number of benefit options.

Perhaps the biggest “aha” moment in this year's MetLife Employee Benefit Trends Study was the finding that employees are overwhelmed with the amount of choices they have and they are looking to their employer for help, says Todd Katz, executive vice president, group, voluntary and worksite benefits at MetLife Inc. in New York City.

“We have a big gap between how brokers and employers perceive employee understanding and what employees really understand about benefits. And the gap is pretty much entirely driven by the way benefit programs are communicated,” Katz says.

Indeed, two-thirds of employees responding to MetLife's survey did not find benefit communications easy to understand. This suggests traditional channels used by brokers and employers likely aren't going to meet employees’ needs anymore, he says.

“Today, smart brokers and smart employers are partnering with more innovative firms, whether they are carriers or enrollment firms that have expertise in communicating benefits,” Katz says. “Also, more and more employees want different avenues for benefits communication, such as call center or face-to-face support, in order 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 more likely to purchase additional coverages, creating sustainable rates and plans.

“When adverse selection is removed, product price points are lowered, thus keeping more healthy risk on the plans,” Leatham says.

He also believes communication will continue to move away from employers’ human services departments to outside services. This might be a health advocate, or another type of third-party firm that helps navigate between the employer and the carrier, providing tools for access and decision making.

“I think it's important that the concierge services be somewhat independent, so the employer group can change their medical and dental carriers without disrupting the communication service that relays the message,” Leatham says.

Michael R. Nadeau, founder of Viverae Inc. in Dallas, believes that wellness providers have the best opportunity to be a hub for information across the entire spectrum of benefits, because wellness programs are rooted in education and awareness. Such providers can partner with other voluntary benefits vendors for things like preventative care and chronic condition management, to drive utilization of an employer's overall voluntary benefits strategy.

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

More innovative offerings

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

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

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

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

Wagoner expects carriers will develop more plans for catastrophic conditions such as violence conducted at protests or in acts of crime, as well as acts of war—including even nuclear war. There will also be more specialized policies for more unual risks that are currently excluded in standard policies, such as wingsuit flying.

Companies outside of the traditional insurance industry will continue to develop products to help individuals, such as private medical centers that are much less expensive than urgent care centers that typically charge anywhere from $75 to $250, he says. For example, Walmart and CVS might launch clinics that charge much lower 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 be payroll deductions for say, $50 a month, for unlimited visits to such clinics,” Wagoner says. “I think very soon, you will see Walmart get into the insurance business with a capitation fee or a fixed fee for unlimited visits for your family to their health center.”

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

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

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

More individuals who have qualified medical plans will likely open such savings accounts if they also buy supplemental plans to help cover deductibles and other out-of-pocket costs, Trussell says.

“That represents a big opportunity for benefits advisors and employers in providing the right account-based plan, and then pairing the underlying health plan with existing voluntary benefit products available in today's market,” he says. “However, a word of caution: Advisors must be careful when matching voluntary benefits products with a qualified HSA health plan. It would be very useful to first know which carrier's voluntary products meet the minimal requirement to be HSA-compatible.”

Bohonowicz says that some carriers are now combining critical illness, cancer, hospital indemnity and accident plans, simplifying their products “so there will be less employee confusion.” Voluntary plans will also begin to cover more services like preventative care, “to get people to do the things they should to lower health care costs.”

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

Telemedicine will become increasingly popular, as more employees seek inexpensive care for commonly-diagnosed illnesses, Bohonowicz says. But soon it won't be a standalone coverage, as most medical carriers 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 — anything that pulls people away from work,” Bohonowicz says.

Nontraditional legal plans and identity protection plans are also on the rise, Rockwell says. One reason for this is that voluntary benefits brokers and brokers that traditionally just sold employer-paid benefits are now both selling these products. Another reason is that more employers are offering them.

Donald A. Rowe, vice president of employee benefits at Legal Club of America in Sunrise, Florida, said such plans are part of the growing awareness of “financial wellness.” Benefit offerings not only include group legal and identity theft plans, but also financial literacy programs, payroll purchase plans, and payroll advance/lending plans, among other programs.

These types of programs, combined with physical wellness programs, are designed to create a physically healthy employee who shows up for work in both good physical shape and good financial shape, Rowe says.

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

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Navigating the evolution of the voluntary marketplace

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