Voluntary Benefits 101: The Why, How and What Ensure Success
Voluntary Benefits 101: The Why, How and What You Need to Know to Ensure Success Agenda What are Voluntary Benefits (VB)? Why You Should Consider Voluntary Benefits How Voluntary Benefit Plans Can Add Value What You Need to Know to Ensure Success 1 What are Voluntary Benefits? Supplemental insurance products available through the workplace Often at a group rate or premium discount Chassis Individual plans Group plans Payment 100% Employee Paid Cost Sharing with Employer 2 Voluntary Benefits Sales (in Millions) Source: Voluntary Sales Strong in 2012: Benefits Selling Magazine, July 2013 3 Most Popular VB Plans Supplemental Term Life Insurance Whole Life Vision Insurance Dental Insurance Short Term Disability Long Term Disability Critical Illness Cancer Personal Accident Long Term Care Hospital Indemnity Auto/Home Legal Services Pet Insurance Discount Plans 4 Employer Common Concerns Employees cannot afford them Company image in shadow of Employees would not be layoffs Fear of aggressive sales agents “I hate insurance” interested Already have a complete package of benefits Payroll deductions are a hassle No time, other priorities Afraid of unions Don’t want to compete with 401(k) One in three employees reported that if it is their choice they hope to be working for a different employer this year. Source: MetLife 10th Annual Study of Employee Benefits Trends 5 Employee Advantages Payroll deduction convenient for payment More convenient than buying retail Better rates / group rates Better underwriting conditions / no medical exams no EOI Payroll deduction is better way to save Saves time 6 Employer / Employee Disconnect Benefits are very important for feelings of loyalty to the company *Dental, disability, vision, life, etc. Source: 10th Annual MetLife Study of Employee Benefits Trends 7 VB is Gaining Importance Employers who agree Voluntary benefits are a significant part of their company’s benefit strategy Year All Companies Under 50 EE’s Under 500 EE’s 500 or More EE’s 5,000 or More EE’s 10,000 or More EE’s 2010 32% 23% 26% 43% 47% 52% 2011 41% 27% 31% 57% 57% 58% Employers agree they offer voluntary benefits for the following reasons: To expand the types of benefits offered without increasing costs 70% To give employees more choice to meet diverse needs of the population 65% To help fill gaps in benefits / coverage 65% To help employees achieve greater financial security through protecting themselves in case of illness, disability or death 65% To replace employer-paid benefits programs and reduce company benefits costs 54% Source: 10th Annual MetLife Study of Employee Benefits Trends 8 VB is Gaining Importance 21% view voluntary benefits as important for 2013 Enthusiasm doubles to 48% for 2018 Most employers plan to take advantage of VB to: Enrich existing core benefits plans (83%) Augment the total rewards package (74%) In designing the plans that fit the needs of employees: 54% focus on employee demographics 50% of total rewards 44% on wellness strategies Source: Towers Watson 9 Why You Should Add Voluntary Benefits Out of Income and Out of Pocket • 51% of employees report they are VERY CONCERNED about financial security in the event of a disability1 • Over the past five years, the average employee’s share of health care costs (premiums, out of pocket deductibles, copays and coinsurance) has INCREASED MORE THAN 50% from $3,199 in 2008 to a projected $4,814 in 20132 111th 2 Annual MetLife Study of Employee Benefits Trends www.shrm.org/hrdisciplines/benefits/articles/pages/healthpremiums-2013.aspx 10 Filling the Gap Unexpected Disability Disability income protection provides financial security in the form of income replacement should an employee be unable to work due to injury, illness or pregnancy leave. Sara’s employer offers a typical 60% LTD policy that is paid by the employer but allows Sara to buy up to 75% of her income Gold represents income not replaced. Base LTD Buy UP LTD Annual Salary $115,000 $115,000 Monthly Salary $9,853 $9,853 Plan Pays 60% / $5,000 75% / $4,500 Amount Paid $5,000 (maxes out @ 51%) $7,390 (75%) $5,000 paid by Core $2,390 paid by buy-up Source: www.CDC.gov / heart disease facts 11 Filling the Gap Unexpected Illness Voluntary Benefits can help employees offset the out-of-pocket costs associated with an unexpected illness. Jane suffers a heart attack and total cost of care (12 months) is $86,122 Provision Cost Total Costs $86,122 Plan Deductible $2,000 Plan Coinsurance 80/20 Jane’s OOP Costs: $6,350* Jane’s CI Policy $20,000 *Based on max OOP for single coverage HDHP • About 600,000 people die of heart disease in the U.S. every year – that’s 1 in every 4 deaths • Heart disease is the leading cause of death for both men and women • Every year about 715,000 Americans have a heart attack (of these, 525,000 are a first time heart attack and 190,000 happen in people who have already had a heart attack) • Coronary artery disease alone costs the U.S. $108.9 billion each year Source: www.CDC.gov / heart disease facts 12 Filling the Gap Unexpected Accident Voluntary Benefits can help employees offset the out-of-pocket costs associated with an unexpected accident. Mike’s son Jeff plays football and recently received a neck injury during a game. Provision Cost Total Costs $57,156 Plan Deductible $2,000 Plan Coinsurance 80/20 Mike’s OOP Costs: $6,350* Mike’s Accident Policy $6,000 *Based on max OOP for single coverage HDHP • Annual ER Visits related to injuries: 45.4 million1 • Children aged 14 and under needing ER treatment for sports injury each year: 3.5+ million2 • Frequency of accidents in the home: Every 2 seconds3 1National Hospital Ambulatory Medical Care Survey: 2009 Emergency Department Summary Tables 2Sports & Recreation Safety Fact Sheet, Washington DC Safe Kids Worldwide, 2011 3National Safety Council (2012) Injury Facts 13 Filling the Gap Discount Plans: Dental Discount plans are not insurance but they can offer valuable coverage at reduced prices. Anjanette flosses regularly and thus, still has all her teeth. She visits the dentist twice per year for cleanings. Provision W/ Insurance Monthly Cost $33.00 Annual Cost $396 Charge for Cleaning / each $115 Annual Cleaning Cost $230 Result -$166 • Examples: • Pharmacy • Teladoc + Rx • Dental • Vision • Roadside Assistance 14 Finding the Right Coverage Looks can be deceiving… 15 The Process Voluntary: Program strategy Determine the plans to be offered Having power of free choice Market for coverage -Miriam Webster Dictionary Enroll employees Data transfer Voluntary Benefits Core Program EE’s Need 16 Program Strategy What is the basis for offering VB? Close gaps in core coverage Provide EE’s with more choice Increase employee communications Improve administrative processes Respond to EE requests for coverage “Add-ons” offered by VB carrier and/or enrollment firm 17 Plans to Be Offered Understand the challenges of your workforce today Increasing medical deductibles? ‒ Supplemental hospital Increasing large claimants? ‒ Critical illness, cancer, accident, disability Processing court orders? ‒ Legal services, EAP High population of baby boomers? ‒ Long term care, life insurance, accident Respond to EE requests? Employee survey with pricing examples 18 Market for Coverage Who is marketing for coverage Benefits advisor (broker/consultant) Enrollment firm Some VB carriers do not offer enrollment services and the use of an enrollment firm will be needed. Enrollment firms focus on employee communication/education and collecting/transmitting the enrollments back to the VB carrier. Key Areas of Consideration (examples next slides): What is the basis for recommending a specific carrier? ‒ Not all plans are created equal What type of plans will be offered: individual or group? 19 Market for Coverage Who is Marketing the coverage? Many brokers will outsource the marketing to an enrollment firm Enrollment firms can be biased Enrollment firm may not have experience working with every carrier Best Practice: Marketing for VB should be the same as marketing for core coverage Release RFP to marketplace Plan design analysis Rate comparisons Performance guarantees Who gets paid and when/how they are paid What additional services are included ‒ Enrolling VB only or VB & core ‒ Enrollment methods (carrier or enrollment firm) ‒ Employee communications ‒ Technology services (billing, etc.) 20 Market for Coverage Plan Provisions May Differ Accident Plan Spouse / child coverage included or extra? When do benefits terminate? Does plan allow for assignment of benefits? Does the plan cover scholastic sports including cheerleading? Can seasonal EE’s be covered? Critical Illness (including those above) Does pre-ex apply? Can it be removed (+~5-7%)? If/when is there a reduction in benefits? Is benefit paid in lump sum or schedule? Is plan H.S.A. compliant? Must insured survive covered illness for payout? What time must pass before a claim is approved for a second/new covered illness? Does the plan include a recurrence benefit? ‒ If yes, what time must pass before payment of recurrence? 21 Market for Coverage Plan Underwriting May Differ Underwriting Guarantee issue ‒ Minimum participation requirements Simplified or modified underwriting Rating Structure Unisex Tobacco status When do rates increase ‒ With age ‒ Plan issued on issue age Rate tier structure 2 or 4-tier rates 22 Market for Coverage Group or Individual Plans? Individual Plans Require licensed enroller for every state to take the application Plans may vary based on state filings for each state Rates will vary by state Plan may not be available in every state Group Plans Function most like “core” plans Plan is sitused in employer domiciled state Same plan offered to all EE’s Same rates to all Consideration: New Hires Individual plans need to make arrangements to enroll new hires with licensed enroller (call center or periodic enrollment periods throughout the year) Group plans can function much like the core plans in terms of ongoing enrollment 23 Enrolling Employees Communication Who will enroll employees: carrier or enrollment firm? What are the charges to employ an enrollment firm? Will meetings be required? Group or individual meetings? Is there a minimum number of participants? What about employees who are out of the office? What about new hires? What type of staff will lead the meetings Commissioned enrollers W2 employees Are you enrolling VB only or VB + Core? What type of training is provided on the plans being offered by the client? What if core is also being enrolled, do the counselors get trained on the core plans? How are kits dispersed to employees? Mail (additional charge) Hand out on site 24 Enrolling Employees Capturing Enrollment How is enrollment captured? Technology Call Center ‒ Added cost ‒ OE only or year round ‒ What if EE uses both (online and call center) Paper forms ‒ Who collects forms (Chasing?) 25 Enrolling Employees Capturing Enrollment: Using Technology Whose technology is being used for enrollment? Enrollment firm Carrier Employer HRIS Is the technology used for initial enrollment and/or left behind for ongoing enrollment? Are there any additional charges to using the technology? Can employees go online and enroll? If technology not left behind, how do you enroll new hires? What happens during OE next year? What is the process for confirming employee elections (signature pads, pin numbers, etc.)? Who supplies signature pads? What is back up plan if technology fails? Is pin # unique to employee? Printing needs (electrical, paper jams, etc.) 26 CAUTION! 27 Data Transfer Technology How does data flow from enrollment source to: Carrier Payroll ‒ What about EOI or underwriting? Do these systems require certain formats to upload data? What if data not in file format? Has enrollment vendor worked with carrier before? Will vendor be responsible for moving data? Will they agree to a performance agreement? Are you paying attention: be the 1st to stand up and shout “I need to get me some VB” to win a prize 28 You Might Have an ERISA Plan… Voluntary Benefit plans are NOT an ERISA plan, if: No contributions are made by the employer; Participation is completely voluntary for employees or members; The sole functions of the employer with regard to the insurance program are (without endorsing the program): ‒ To permit the insurer to publicize the arrangement to the employees, collect premiums from the employees through payroll deductions, and remit premiums to the insurance carrier ‒ And the employer receives no consideration in connection with the program except reasonable expenses If the employer deducts the employee premiums on a pre-tax basis through its Section 125 plan, the benefit may no longer meet the requirements to avoid being considered an ERISA plan. Inclusion of the benefit in the employer’s Section 125 plan has been considered by some courts to be an employer endorsement, thereby making it subject to ERISA. 29 Case Study 30 Case Study White collar employer: professional recruiters 300 employees across multiple states One carrier for critical illness, accident and Individual Disability Income Carrier enrolled ‒ Core and VB Face-to-face meetings Webcast held prior to face-to-face meetings and additional content was posted on the online web portal 31 Face to Face Enrollments Which of the following most accurately describes your benefits counseling session: 100% 80% 81% 60% 40% 20% 0% 6% A B 8% C 4% D A. The counselor was a good teacher, provided good advice and I left the session better educated about my benefits. B. I did not have quite enough time to make my decisions and may have felt a little bit rushed. C. I still have a few questions that I wish I could have had answered prior to ending my session. D. I did not have a good experience. 32 Face to Face Enrollments Based on your counseling session, please choose the comment that is most accurate: A. B. C. My level of appreciation and understanding of my employee benefits is similar to that of years in the past. I now have a greater appreciation and a better understanding of my employee benefits and the cost of those benefits to our company. I am more confused than ever. 33 Face to Face Enrollments Prior to this counseling session, did you know that ABC pays a substantial portion of your health insurance premium? 34 Face to Face Enrollments In the future, please let us know which enrollment process you prefer: 100% 80% 60% 65% 40% 20% 0% 6% A 22% B 7% C D A. Paper enrollment process B. Enrollment over the Internet C. Call Center enrollment D. Both enrollment over the Internet with the ability to speak to a call center counselor 35 Face to Face Enrollments I appreciate the opportunity to purchase voluntary benefits through payroll deduction 36 In Closing: Revisiting the Misconceptions 37 Critical to Retention & Productivity Employer Paid Benefits Joining my employer Employee Paid Benefits Staying with my employer Source: 11th Annual MetLife Study of Employee Benefits Trends 38 Avoid Status Quo 62% are interested in having their employer provide a wider array of benefits 77% value benefits geared to individual circumstances Employees are most interested in their employers offering: Dental Insurance 76% Accident Insurance 56% Prescription Drug Discounts 75% Critical Illness Insurance 53% Vision Insurance 72% Hospital Indemnity Insurance 53% Source: 11th Annual MetLife Study of Employee Benefits Trends 39 Unleash the Power of VB Offer employees buy-up options for additional disability coverage to fit their individual needs Consider adding accident, critical illness and hospital indemnity insurance to the benefit program Deliver communications to employees that demonstrate the complementary nature of the benefits and why the plans will bridge their out of pocket expenses 40 Want More Information: Anjanette Simone, CBP, WLCP Phone: 813-490-6833 Email: Anjanette.Simone@Willis.com Thank you for choosing to participate in my session. As a “thank you”, I’m giving away Willis Totes to the first FIVE people who stop by the Willis Booth and say, “The Future’s in Voluntary Benefits” Booth #’s 422 & 424 41
© Copyright 2024