The Changing Landscape of Ancillary Benefits
Jun 1, 2012
Ancillary benefits marketing has taken many twists and turns over the past several years. Beyond the machinations brought on by “Health Care Reform,” there are additional external factors working to change the way benefits are viewed and purchased by end-user consumers. The first major game changer is the skyrocketing costs associated with group benefit programs. The second is the level of sophistication of the average consumer as enhanced by access to first-hand information available on the internet. Finally, the internet itself has had a dramatic impact both on marketing as well as direct-to-consumer access to products.
To the first issue, rising coverage costs. As major medical insurance premiums stretch the budgets of employers across the country, many have opted to convert their ancillary coverage offerings (Dental, Vision, Chiropractic, Life, etc.) to voluntary status or remove them from their offerings altogether. This has the cumulative effect of lowering employee participation in these programs, thereby jeopardizing the availability of the programs to all employees. When employees no longer have the opportunity to acquire benefits through their employer they will often seek coverage elsewhere.
This brings us to point number two: the increasing sophistication of the consumer. When ancillary coverage is no longer available from an employer, many consumers turn to their broker, or more often, to the internet for information and access to what many view as primary benefits. At this point many potential plan members put on their consumer hat to shop and compare plans for coverage levels and, more importantly, value.
In this way the internet is the great equalizer. There is a great deal of product and service information available online. Consumers, who have had several years of employer-sponsored coverage to determine the value of a particular benefit, have access to compare plan benefits and rates online and instinctively know which are the most cost-effective, covering the desired benefits at fair pricing.
Brokers who have embraced the technology available to them are making significant advances, particularly in the “Personal Plan” marketplace. For every 10 employees who have lost ancillary benefits, six will go shopping for similar coverage either online or with their local health plan broker. The internet has been a wonderful tool for both large corporate as well as individual brokers who place embedded links within their own website and are able to drive sales 24 hours per day, 7 days per week.
If you have not yet begun to offer individual coverage to your clients who downgrade or eliminate their ancillary benefits, then you are missing exceptional “pass through” opportunities and leaving the door open for other brokers to walk through.
About The Author
Phillip Needleman, Senior Vice President of Vision Plan of America, is a licensed broker and third party administrator who as been working in the ancillary employee benefit and individual ancillary benefit market for over a decade.