Monday, March 20, 2017

Is It Time to Refresh Your Voluntary Benefits?

by Wesley Price

Voluntary benefits have been around for several decades. These are coverages and products made available to employees for elective purchase at the employee’s expense. Over the years, as the cost of health insurance has continued to increase, employers have shifted the portfolio of offerings from employer-paid to voluntary. As a result voluntary benefits has evolved from being limited to main core benefits like dental, vision, and life insurance to including accident insurance, disability and critical illness. Additionally, new benefits are emerging based on growing demand, such as pet insurance, fraud protection and legal services.

The administration of employee benefits has also evolved. Previously, new enrollment into plans would require personnel onsite to enroll, educate and deliver the policies causing a potentially cumbersome disruption to an organization’s daily operations. The expansion of online enrollment has taken the burden out of the enrollment process, making it easier for the employee to sign up for benefits at their own convenience. Although employers and participants alike have access to online education, customer service and account information, having benefits experts on-site during the critical open-enrollment season remains a mainstay of the most successful programs.

Voluntary benefits have risen in popularity for several key reasons including cost efficiency, employee convenience, and enhancement to the overall employee benefits package. As a result, employers have been able to leverage these benefits for recruiting and retaining employees. In order to ensure that voluntary benefits programs continue to be valuable to the employer and employee, employers should follow a careful assessment process.

Review Program Offerings

Most employers will automatically include some of the main core voluntary benefits – dental, vision, life insurance. Considering the expanding list of available benefits, employers have the opportunity to select voluntary benefits that will set them apart. The most important factor in the selection process is to gain an understanding your employee population and group demographics. Employers can analyze the employee population by conducting an employee census, or other type of workforce evaluation to help determine the group make up. Retirement preparation may be important for the “baby boomers”, technological enhancements and remote access may be more of a priority for Millennials, and supplemental medical benefits more critical for Generation Xers — all needs which can be incorporated into a voluntary benefits offering.

Another good way to help determine which voluntary benefits are appropriate is to simply ask your employees. Employers who conduct surveys can get a firsthand indication of what is of interest to employees. However, that does not always guarantee high enrollment rates. It is imperative that you study and understand your population to determine the voluntary and employer-sponsored benefit package that makes the most sense for your entire group demographics. The right selection of benefits should also encourage enrollment and remain cost effective.

Enrollment Evaluation

A key factor to help gauge the success of a voluntary benefits program is the enrollment statistic. It is important to understand whether 5% of the population is enrolled in a given program, or if enrollment is 35%. If it’s 35%, there is a strong indication that the program is working. If there is only 5% enrollment, then that program may be a good candidate for a replacement, or evaluation at the very least.

Contract Review

Particularly with more established programs, it is important to re-evaluate contracts against what other carriers can offer today in terms of technology, customer service enhancements, and program options. Twenty years ago, employers may have included two or three options for voluntary benefits. As the industry increased the variety of offerings, and choice expanded for employers, the solutions often came from various insurance carriers – giving the employer and employees multiple points of contact. Carriers have been expanding their offerings giving employers a lot more options to choose between and allowing employers to bundle some of their services. However, employers must be mindful that too many voluntary benefits options can create employee confusion.

Now, voluntary benefits are taking on a new role. No longer seen as an after-thought or mere add-ons, voluntary benefits are part of the overall employee benefit portfolio; they fill coverage gaps, enhance limited benefits, and enrich the overall benefits package. When appropriately designed and fully integrated into the overall employee benefit portfolio, voluntary benefits help to attract employees with a robust benefit offering without high employer costs. It no longer makes sense for employers to have an outdated employee benefits package or a plan that does not include voluntary benefits at all. More employers are seeing them as the way to offset their employee benefits and retirement offerings. There is no magic number for how many different voluntary benefits an organization should have, and an older plan does not necessarily mean an inefficient plan. Whether it is an appropriate minimum participation level, variety of offerings, or cost parameters, employers will want to work with their advisers to determine success criteria for the voluntary programs they are running in their organizations.

If you have any questions, or would like to begin talking to an advisor, please get in touch by calling (800) 388-1963 or e-mail us at hbs@hanys.org.