It’s no Secret—Voluntary is the New Cool Kid on the Block
Aug 31, 2015
We all know him—the kid that came back after summer and grew six inches to be the new, all-star football player. He worked hard on the sidelines; but this year, he took the team to playoffs. His group of friends went from three to 300.
Sometimes you can do great things for years but not everyone notices. But, when the time is right, you can really come up swinging and land a big one.
The old classic is changing
The market is always changing—today and always. And the hot topic right now is voluntary benefits. Brokers are migrating in flocks to sell it. So much so, that today, 95 percent of employee benefit brokers sell voluntary products.1 It’s been a steady stream over the years, but the past couple are where we’ve seen drastic growth. Most of this is because of the ACA and so many brokers looking for an additional revenue source. Not to mention, offering voluntary products can help their clients solve employee communications and engagement needs. What used to be the normal healthcare benefit sale has become a little more complicated.
With less stable broker compensation coming from healthcare, and the need for voluntary benefits, many brokers have begun navigating the voluntary benefits territory and found it more complex than they thought. However, the need for employer education has never been stronger. That’s why working with an experienced carrier can really come into play.
Here’s why: First, employers have many options available to them to either keep their existing benefit plans or change them to make them more cost effective for their companies. Therefore, employers are looking to their brokers to guide them to the best choices. At the same time, employers need help communicating and educating to their employees since benefit plans are ever changing.
Second, if the employer decides to change the benefit plan available, the plan will mostly likely stay with some sort of cost-shift to the employee. Employers are now dealing with how to ensure employees feel “covered.” How do they help reduce their employees’ financial risks? Employees need to understand how these cost-shifting changes can affect them and their families. Voluntary benefits can be brought in to create the added cushion employees need and fill the gap left by their insurance.
In either case, regardless of whether employees stay with the employer’s plan or go a different direction, their risk of out-of-pocket expenses may have dramatically increased. Should something unexpected happen, such as a disability, an accident, a critical illness, or long-term care, that out-of-pocket risk can become very real.
Many of us know the statistics surrounding an American’s emergency funds today, or lack there of, should something happen. The fact is, those funds simply aren’t there. We all say the “market” is changing but really, that’s not the only thing changing. The needs of the consumers are changing with it as they navigate their new options.
When selling or offering voluntary, here are a few things to keep in mind.
Voluntary benefits can be a cost-saver
For employers looking to enhance their benefits package, while at the same time, reduce their costs, voluntary benefits can be a natural fit. We all know that, even if we try, there will likely be some cost shifting to the employee in the future. They will ultimately have more responsibility for their healthcare spending, yet with financial stress comes a lot of other issues. Keeping employees focused and productive can be difficult when financial concerns weigh on their mind, such as medical bills, hospital stays, treatment costs, caregiving, short- or long-term illness or disability.
Working with an experienced carrier to place voluntary products that speak to employees’ needs can help offset their added healthcare out-of-pocket costs. The cost of putting in voluntary can be relatively nothing for the employer if the products are sold at an individual level.
Employees are confused
It’s no secret there have been a lot of changes happening, and to the employee, it’s more than a little confusing. In fact, in our recent survey, 95 percent of employees said they wanted someone to talk to about benefits information.2 Employees do not fully understand their options or what is available to them—and this includes the amount the employer actually pays for their benefits.
As I mentioned before, employers are looking for an easy way to communicate with their employees, help them understand their benefits and increase engagement. The voluntary benefits enrollment process can become a vehicle for one-on-one employee communication, education and engagement. Many employers use this as an opportunity to communicate to each employee a key company initiative or message such as: 401(k) participation, wellness programs or high-deductible health plans. Enrollers or communication specialists leading the enrollment can also provide individual “hidden paycheck” or “value of benefits” type of statements to help employees understand their benefits and the employers associated costs for providing these benefits.
Keep the offer simple
When introducing voluntary benefits to an employer, or when taking over a group, be sure not to overwhelm employees with a million new, shiny options. Determine what is right for the group, including the plan offers, and go from there. Introduce one or two voluntary products at a time, and then go back the following year or year after with another product. Let employees understand the value of voluntary before putting multiple options in front of them for purchase and possibly overwhelming them.
Re-enrollment is more important than you think
As I just mentioned, going back year after year is what makes voluntary benefits such a solid revenue stream for the broker. When you sell a case with voluntary products, that revenue presents itself every year. We have clients that have been with us for more than 20 years. Ongoing client relationships are extremely important.
Voluntary benefits also provide a valuable service for the employer by helping to communicate to their employees. The same enrollers go back every year and essentially become the employees’ “insurance agents,” for them and their families. In todays high-paced world there is little over the kitchen table insurance sales occurring for Middle America. It doesn’t happen much anymore. Employees get used to seeing the same face every year at their employer, and they know the enroller is there to talk to them about their benefit options and the value of their benefit package.
Don’t lose this opportunity.
Reduce administrative burdens
Aside from all the other benefits of voluntary products, especially because of the times we are living in right now, don’t forget that offering voluntary can help an employer with HR functions (especially because many HR and payroll departments are stretched). It can help reduce manual processes, improve payroll efficiencies through consolidated billing or a customized payroll deduction process, as well as ease the change or eligibility file process.
Ask the carrier as many administrative questions as you can to help assess their experience. This business is complex, and only those carriers with long-term, true voluntary benefits administrative experience will be able to answer easily. And, this includes how they interface with their clients and any custom administration services they provide.
Here to stay
Voluntary products have been here all along, but just a couple years ago we have started to see them move into the limelight, and it doesn’t look like they are moving out of it any time soon.
We all know times have changed, and we have no idea what the future holds. What we do know is that consumers want these types of benefits so they can be ready. So they can feel prepared. So much so that 62 percent of them would consider not even taking a job if voluntary benefits were not offered.2
Between technology advancements and needed ACA reporting, to finding ways to communicate and educate employees, to offering more and better benefits in the face of extensive cost-cutting, it’s imperative to have voluntary benefit carriers you can count on.
It’s time to create a newer version of the old classic. Don’t be scared to ask questions. The right carriers will be there to offer their guidance.
About the Author:
Dan Johnson is vice president of sales and marketing for Trustmark Voluntary Benefit Solutions. He has more than 30 years experience in the insurance industry. Dan has spoken to various industry groups such as Voluntary Employee Benefits Board, National Association of Health Underwriters, and Million Dollar Round Table. Dan was elected into the Workplace Benefits Hall of Fame in 2013. Contact Dan at firstname.lastname@example.org.
1benefitspro.com. On board with voluntary. May 18, 2015. Lowerre, Gil and Brazzell, Bonnie.
2 Nationwide survey of 350 individuals, 2015.