While major medical insurance remains the centerpiece of most employers’ benefit packages, voluntary benefits are an important part of their benefit mix. Voluntary benefits (life, disability, accident, critical illness, hospital indemnity, cancer, and even pet insurance) round out a company’s benefits offering and help employees manage costs that their health insurance doesn’t cover. When these benefits are offered as part of a defined contribution benefits model, which puts employees in charge of allocating funds among a menu of benefit options—customization becomes easy.
Prudential’s Eighth Annual Study of Employee Benefits: Today & Beyond showed that if given $100 to allocate across benefits, employees would use 75% to purchase health, dental, and vision coverage, and apply the remaining 25% toward other coverage such as voluntary benefits. Here’s the breakdown:
$56 Health insurance
$12 Dental insurance
$7 Vision plan
$6 Group life insurance
$5 Group disability insurance
$5 Accident insurance
$5 Critical illness insurance
Valued By Employees And Employers
The Prudential study shows 71% of employees (up from 63% in 2012) feel the offering of voluntary benefits increases the value of their company’s overall benefits program. Not only is getting voluntary benefits through their employer convenient, they can enjoy group savings for these benefits—paying less than they would if they purchased them outside of the workplace—and the additional coverage helps create a financial safety net.
MetLife’s 12th Annual U.S. Employee Benefit Trends Study shows 64% of employees (up from 54% in 2012) are interested in having their employer provide a wider array of voluntary benefits that they can choose to purchase, and 60% (up from 51% in 2012) are willing to bear more of the cost of my benefits in order to have the choice of benefits that meet their needs.
For employers, including voluntary benefits in their benefits program is more than a competitive advantage—it’s affordable, too. Offering voluntary benefits adds little to no cost to their overall benefits spend, depending on whether they contribute any benefit dollars toward purchase of traditionally employee-paid coverage.
The Case For Education
Yet, according to findings from MetLife’s study, only 36% of employers are very satisfied with employee participation in voluntary benefits, suggesting that there is more that employers can do to promote their advantages. The same can be said for consumer-driven health plans (CDHPs), like those frequently offered as part of a defined-contribution benefits strategy. One barrier to employees’ adoption of both CDHPs and voluntary benefits is a lack of understanding of how they fit into the financial big picture.
CDHPs and voluntary benefits can both contribute to an employees overall financial wellness; but first, employees need to understand their financial needs so they can make appropriate benefit elections. People have a lot to consider, and the prospect of selecting the right voluntary benefits on top of the right health plan may be overwhelming. Employers should provide training about how the products can address their questions—what the plans cover, when the coverage applies, and how the plan(s) work together with other forms of insurance or savings accounts. Education efforts can begin before open enrollment season or last throughout the year, as long as employees feel comfortable making benefits decisions by the election deadline.
Opportunities for TPAs and Carriers
Research supports the idea that employers don’t have to go it alone. They should get expert help from their health plan, insurance broker, or voluntary benefits carriers to guide their employee education and communications—not only at open enrollment time but at key times during the year. Voluntary benefits help protect people against the financial risks that often surround life events: disability, premature death, and unexpected medical costs, for instance. The Prudential study uncovered that 46% of employers are open to the idea of sharing employee information through a TPA to the carrier on an employee’s life event so the carrier can facilitate a communication to the employee—and 63% of employees report that they would be very interested in being notified of benefits changes or options at the time of a life event.
Employers integrate voluntary benefits into their benefits packages to provide their employees with comprehensive coverage for healthcare and financial wellness. When offered in a defined contribution strategy, employees are given a wider array of products from which they can allocate their benefits dollars—letting them customize their benefits package to meet their particular needs.
Prudential’s The Eighth Annual Study of Employee Benefits: Today & Beyond The ABCs of Voluntary
Prudential’s The Eighth Annual Study of Employee Benefits: Today & Beyond Group Benefits and the Defined Contribution Model