The financial clout of Voluntary benefit solutions

Voluntary Benefits Team

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The continuing rise in healthcare costs and insurance premiums, the Affordable Care Act (ACA) and its focus on benefits consumerism and the insurance needs of a multi-generational workforce are shaping today’s group employee benefit programs. These forces are also moving Voluntary benefits from what used to be almost an afterthought to the center of an integrated benefits program.

Voluntary products are increasingly important because employees are bearing a greater financial burden for their health insurance. In turn, they are asking for more choices in their overall benefit options. As we work with employers to design their benefit programs, we are suggesting they incorporate targeted Voluntary benefits to address the financial goals of their organizations and the needs of their workforce. Below are several Voluntary benefit strategies we’re using to help our clients and their employees:

Major Medical Gap Solutions
Consumer Driven Health Plans (CDHPs) are rising in use as an effective tool to control major medical insurance premiums. But CDHPs have a downside for employees; these plans shift more of the financial responsibility for healthcare to plan participants through higher deductibles and co-pays for doctor office visits, outpatient procedures, diagnostic services and emergency room treatment. Typically, CDHPs are offered with a Health Reimbursement Account (HRA) or a Health Savings Account (HSA), both of which are designed to help employees bear the burden of higher out-of-pocket costs. However, HRAs and HSAs often don’t provide adequate financial protection for hospitalizations, outpatient procedures or diagnostic services. Similarly, employees face a significant financial exposure if they’re afflicted with a serious illness such as cancer, or face a major surgery like an organ transplant. Voluntary products such as Hospital Confinement/Medical Bridge plans, Accident plans and Critical Illness provide employees with a much-needed financial safety net.

Telemedicine
Telemedicine is capturing a lot of attention from employers and with good reason. Medical costs are expected to continue to trend upward, and as noted above, the rise in CDHPs is prompting employers and employees to look for ways to offset out-of-pocket costs. While Voluntary benefits such as Accident, Critical Illness, Hospital Confinement and Medical Bridge plans can help cover costs associated with CDHPs, an often overlooked solution is Telemedicine, which is changing the way people seek and get medical advice, diagnoses and prescriptions. Telemedicine consultations can act as a “first responder” and a supplement for non-emergency treatment and visits to a primary care physician. Advances in communication technologies and the ACA’s focus on efficient and cost-effective care have helped reshape Telemedicine, which:

  • Connects patients with U.S. board-certified physicians licensed in their state, any time any day or night.
  • Gives access to treatment for common non-emergency ailments.
  • Provides consultation on symptoms and treatment options.

Including Telemedicine as a part of an overall portfolio of employee benefits can be an important healthcare cost-containment tool for plan participants and employees.

Switching Dental and Vision Benefits to Voluntary
There was a time when Dental and Vision plans were part of most group employee benefit packages. But to reduce cost, many employers are discontinuing these products as part of their group benefits. Even so, Vision and Dental benefits can be critical to achieving and maintaining good health. Certain high-claims conditions (diabetes, heart disease, stroke, etc.) can be detected through dental and vision exams. Therefore, employers still see the value of Dental and Vision plans and are offering them as Voluntary benefits. Moreover, this coverage is an important recruitment tool.

Long-term Care and Critical Illness Solutions
Advances in medical technology increase the odds of surviving a critical illness. The flip side is that these patients often require some kind of long-term care, which is expensive. Many states and the federal government have attempted to address the issue of long-term care expense via state partnership programs for individuals and tax incentives for both businesses and individuals who buy coverage. Because of the difficulty in underwriting long-term care plans and pricing them accurately, we’ve seen many group carriers exit the market. Carriers do remain in the Voluntary long-term care space but the cost of these plans makes them prohibitive to many employees. On the other hand, Voluntary Critical Illness plans are abundant. Voluntary carriers have developed riders to Permanent Life Insurance plans that provide financial protection should a policyholder require extended care or is diagnosed with a critical illness. These plans, sometimes referred to as hybrids, satisfy multiple financial needs, and this feature makes them popular with employees.

Employee Concierge Services
This service saves employees time, money and helps reduce stress. Concierge professionals plan business and personal trips, help find a plumber or a babysitter, purchase event tickets, make reservations, and even pick up dry cleaning or groceries. They also connect employees on overseas assignments to professionals who speak their language, helping them to ease into a transition, avoid local scams and navigate a foreign bureaucracy. Most employees don’t check their personal life and responsibilities at the door when they come to work, which can have a negative impact on a company’s productivity. By helping employees manage their personal affairs through an Employee Concierge Service, employers can improve productivity.

Part-Timers, 1099 Consultants and the Uninsured Worker
As a result of a continuing sluggish economy, rising healthcare benefit costs and the ACA, some employers are moving jobs from traditional full-time, benefit-eligible positions to part-time or contracting jobs that are not eligible for group coverage. Impacted employees are often left to their own devices to find affordable benefits. Some will enroll in Heathcare.gov or state-run public exchanges, where they may even qualify for an exchange subsidy. Some, however, don’t qualify for a subsidy and therefore can’t afford to purchase individual health insurance. Employers can provide financial relief by offering Voluntary benefits to the entire workforce and particularly to part-timers and consultants who work 20 hours or more a week. For employees who don’t qualify for a subsidy and choose not to enroll in benefits via a public exchange, Voluntary benefits won’t protect them from a government penalty. Even so, Voluntary benefits such as Telemedicine, Dental, Vision and other products may be their only access to affordable coverage.

The Bottom Line
A recent surveyi of employees by health insurance carrier CIGNA found that consumers are expressing increased interest in Voluntary benefits. For instance, 50% of survey respondents expressed interest in enrolling in Disability insurance, while 46% said they wanted to learn more about Critical Illness coverage. Another 45% expressed interest in Accident insurance.

Because employees purchase Voluntary benefits at group rates, these plans are typically more affordable than similar coverage bought on the open market. Employee benefit consultants can also impact Voluntary product affordability by negotiating additional protections with carriers (such as guaranteed issue coverage) and waiving pre-existing condition clauses and participation requirements. For employees dealing with health issues, the workplace may be the only place they can access plans that are affordable.

What’s good for the financial health and general wellbeing of an employee is good for the employer too. As businesses seek to maintain a competitive edge, a Voluntary benefit solution will become a more prevalent addition to traditional employee benefit packages.

i CIGNA’s “Voluntary Benefits Consumer Survey,” November 2013


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