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Voluntary Benefits: Health Care Reform's Silver Lining

Leverage voluntary benefits as a means to fund benefits education.

There’s much talk these days about the negative intended and unintended consequences of health care reform. But, like everything in life, there’s a silver lining here, too.

More employers than ever are now using voluntary benefits to fill coverage gaps for their employees as they move to high-deductible plans. But, what employers might not know about offering voluntary benefits is that they can also be an efficient and cost-effective way to communicate your total benefits package to employees.

Voluntary benefits plans are naturally structured to include funding for a benefits communication and education program that can often include a specialized enrollment education firm with enrollment technology - available at no additional cost to the employer.

“Introduced through the commissions built into the voluntary or personalized benefits, an enrollment and education firm takes a resource-intensive element of the job off the company’s HR staff and actually creates a new line of communication with employees about their benefit options,” said Joe Torella, East Region President, Employee Benefits Division, HUB International. “If we’re giving people more choice around their benefits, we need to communicate their options to them in a way we haven’t previously done. This more employee-centric approach is the impetus for the shift from voluntary to personalized benefits.”

Voluntary coverage can include accident, critical illness, hospital indemnity and dependent health coverage, legal, life, disability, travel and even pet insurance. The new line of communications around voluntary benefits can be championed by both in-house and third-party benefits specialists working in tandem and can include any combination of print and online materials, one-on-one meetings and benefits seminars for employees.

A Win-Win

We already established that voluntary benefits help the employer, as product choices made by the employees help fund initiatives that the employer has around enrollment, education or communications. But, the employee also wins. For many employees, purchasing voluntary benefits can be a new and rewarding experience. When the employer directs investments to employee communications and education, employee engagement and satisfaction increase.

“Some of the employees we work with haven’t sat down with an HR representative on a one-on-one basis since they were hired,” said Torella. “But, the fact is that employees are more content when they choose their own voluntary or personalized benefits. When they get the message: ‘My employer wants me to buy coverage that’s valuable to me not just a catch-all plan they’ve chosen,’ they tend to choose a more efficient array of benefits that better meet their needs and the needs of their families.”

Additionally, most voluntary benefits will be excluded from the Cadillac Tax, a non-deductible excise tax on “Cadillac-style” healthcare benefits. For all these reasons, more and more employers are leveraging voluntary benefits together with a combination of traditional group medical and ancillary lines of coverage as a means of filling the coverage gap left by new high-deductible plans.

Multi-Year Strategy

Questions to answer when developing a 3 to 5 year voluntary benefits strategyKey to introducing voluntary benefits to employees is creating a three- to five-year strategy around all your benefits plans (see Viewing Employee Benefits from 50,000 Feet).

“A good broker will build a multi-year strategy around your organization’s KPIs and create a personalized benefits palette for your employees that makes the most sense for them based on the life stage and activities they are engaged in,” said Torella.

Torella further suggests that employers should ask themselves the following questions when developing a three- to five-year strategy that includes voluntary benefits:

  • Can we build a strategy that meets all the expectations of our employees?
  • How can we communicate and educate employees about it?
  • How do we obtain the funding needed to deliver additional resources to our employees as in the past?

Overall, given the many objectives of a multi-year strategy, improving employee satisfaction around all benefits –voluntary, medical and ancillary coverage is critical. Torella recommends starting with an employee survey. Find out what types of coverage are important to your employee base and start there when it comes to determining the best voluntary benefits to offer.

Contact your HUB Employee Benefits specialist today to find out how your business can take advantage of voluntary benefits and the enrollment education that comes along with them.