Rick Rosenquist 2013-02-01 02:39:56
Are Voluntary Benefits Becoming More Important? As the open enrollment period has just ended for many employers, voluntary benefits have undoubtedly played a larger role in a firm’s overall benefits package. Typically many firms, especially smaller firms, have been passing along bad news in the form of medical rate increases, increased employee contributions, and higher deductibles/coinsurance and co-pays. Firms can now look to voluntary benefits as a way to increase employees overall financial well being. Statistics show that the majority of personal bankruptcies are due to medical expenses, even though more than 70% of people had medical coverage in place! Voluntary benefits are best defined as insurance products offered by a firm, but paid for by the employee.A firm is able to obtain a more attractive group rate than an employee could find as a individual, and payment typically comes in the form of payroll deduction, some of which may be pre-tax. Healthcare reform hasn’t been the only impetus in generating interest in voluntary benefits. The downturn in the economy has increased employee participation in these programs as well. But what voluntary benefits are firms looking at and how do you know you have those benefits that your employees value and help your firm attract and retain employees? Here’s a look at what some firms are offering today: Life Insurance: Of particular importance to those employees with a spouse, children, or other dependents, life insurance can provide a sense of security in the event of one’s death. Most recently, many carriers are combining this benefit with a long term care (LTC) rider. With the exit of almost all carriers from the group LTC market, and the repeal of the Community Living Assistance Services and Support (CLASS) act, life insurance with this feature deserves special attention and will, in my opinion, grow substantially in the next few years. Disability Insurance: If an employee is unable to work due to disability, short or long term disability provides a reliable source of income. Many households, especially in this uncertain time, live paycheck to paycheck; a loss of income whether temporary or permanent can be a devastating blow. Disability was discussed in detail in the November publication. GAP/Hospital Indemnity: This coverage provides either a specified amount per hospitalization, or a specified daily benefit to a maximum amount. These plans are typically valued by employees and may help increase adoption rates of HDHP/HSA elections. Critical Illness (CI): If an insured should be diagnosed with any critical condition such as a heart attack, stroke, or cancer, a one time lump sum payment will be issued to help offset any medical care costs. Accident: The most common claims here include emergency room services, follow up visits, fractures, hospital services and physical therapy. If a family has accident insurance, they are given a lump sum payment that can be used as needed to help soften the financial impact, otherwise, these types of incidents can really drain a families bank account. Both CI/Accident plans can include wellness riders which drive participation in testing which enhance long term savings. Firms should construct these plans to encourage testing through different contribution arrangements to achieve the desired end result. Dental/Vision: Dental coverage, if not a employer paid benefit, can be expensive. Annual eye exams and prescription eyewear can also be costly. Legal Coverage: I’m sure you are all aware of this one. Pet Insurance: I usually get a chuckle when discussing this benefit, however, take a pet in for a surgery and you’ll stop laughing quickly. The key is to be creative in choosing appropriate benefits that can appeal to employees and in communicating their value effectively— making connections between the voluntary products and employee needs. Voluntary benefits are not a one-size-fits-all solution. Factors such as age, the local economy, marital status, or family structure affect insurance needs, so offering a wide selection of options ensures there is a plan for everyone. Many voluntary benefits are HSA compatible, such as critical illness/accident and GAP/hospital indemnity medical plans. As part of a comprehensive benefits package, these benefits can be used as a way to offer current staff members the opportunity to fill in gaps in their insurance portfolio and they may help entice new hires as well. Many types of coverage can also be continued by employees even after they leave the firm. The critical component here is the plan offerings for a given population and, as you have heard me state before, communication to employees is always critical. Rick Rosenquist is an employee benefit consultant. He has been instrumental in developing VIP programs for the Association of Legal Administrators through broker/consultant partners. He can be reached at 480-659-1533 office, 602-320-9093 cell or via email at email@example.com.
Published by Target Market Media . View All Articles.
This page can be found at http://digitaleditions.walsworthprintgroup.com/article/EMPLOYEE+BENEFITS/1301994/144944/article.html.