In today's economic climate, the rising cost of health insurance has placed an additional burden on employers as they struggle to fund a portion of premium costs for their employees.
Despite these higher costs and a slow-moving market recovery, many companies are successfully sustaining their businesses and retaining top talent by reevaluating and reconstructing their benefits packages -- a tactic that, in many cases, has helped to support the bottom line without emptying employees' wallets.
According to a recent study, worksite marketing -- a sales strategy focusing on payroll deduction-based sales to individuals -- may be one of the beneficiaries of escalating health care costs. Nearly 3 in 10 employers say they may switch some benefits to 100% employee-paid, and 18% may implement voluntary benefits programs, according to a recent LIMRA survey.
While plan changes typically involve higher out-of-pocket costs for employees, the proliferation of voluntary benefits programs in recent months has helped ease these costs and provide employees with affordable, meaningful options.
Voluntary products -- also known as worksite products -- help bridge the gap between what employers can comfortably afford to offer and the benefits deemed necessary among employees. In these situations, a business can offer employees voluntary, payroll-deducted coverage at competitive rates, while retaining the security of knowing it's still offering quality benefits from respected and experienced companies.
As an option to employer groups, many companies offer voluntary products, which might consist of term and permanent life insurance, short-term disability, long-term disability and dental. These benefits are offered at affordable group prices that make it easy for employees to enroll. Additional pretax or after-tax benefits add to the overall appeal and flexibility of these voluntary benefits packages.
Which benefits to offer?
Voluntary benefits packages are not one-size-fits-all and may be customized to fit the varying needs of organizations and their employees. When configuring a voluntary program, employers must consider the needs of their organization to determine which benefits will resonate best.
In the current marketplace, employer interest in voluntary worksite benefits is reflected in strong sales of certain products. According to a 2010 LIMRA study on U.S. worksite sales, long-term care (LTC) and critical illness remained the fastest-growing voluntary offerings in 2010, with accident also showing a double-digit increase. Here are some of the most popular and widely available voluntary programs:
Long-term care (LTC) -- LTC products are designed to help people prepare for and manage anticipated long-term care expenses, if and when they happen. As a result of regulations that now permit the combination of annuity products with riders offering LTC coverage, organizations will begin to see an increase in product innovation on the LTC front.
Accident insurance -- Accident insurance coverage provides employees with cash benefits in the event of an accidental injury. This benefit may provide coverage of multiple injuries sustained in a single accident and, in some cases, features portability, so employees may retain their coverage if they leave their company.
Voluntary term life insurance -- Term life insurance offers life insurance coverage to employees at a typically less-expensive rate than individual insurance, making it a good choice for protecting against a loss of income due to the death of a family member. Term life insurance coverage periods are established for a specified length of time, and policies do not build cash value over time.
Short-term disability (STD) -- The purpose of STD is to protect the income of employees who must miss work due to a non-work related sickness or injury. Many falsely assume that worker's compensation will provide the coverage necessary for a disabling event. STD helps individuals maintain their income and standard of living until they are able to return to work.
Long-term disability (LTD) -- Income loss from an extended disability period can be significant. LTD offers income protection to employees unable to perform all of the material duties of their occupation on a full-time basis due to sickness or injury, including critical illnesses such as cancer.
Dental -- Dental coverage offers benefits for employees, their spouses and dependent children. Many packages allow employers to choose from an array of deductibles, benefit percentages and maximum benefit options. Plans may cover preventive and basic services only or may include comprehensive options covering major care and orthodontic services.
As cost-shifting from employer-paid to employee-paid benefits continues, it is clear that voluntary benefits will remain a powerful way for employers to control spiraling costs without sacrificing the integrity of their benefits programs. New products will continue to enter the marketplace, and existing products may be simplified as the industry heads in this new direction.
No matter what form voluntary benefits take, the worksite will continue to offer the greatest opportunity for employees to access quality and affordable benefits products, and employers are well-served to provide them with these options.
Bob Risk is the senior vice president of sales for Lincoln Financial's group protection business. He is responsible for the development and execution of the sales goals and strategies to support Lincoln's group insurance products. Risk has 19 years of experience in the insurance industry. He is an established and often-quoted subject matter expert in group insurance trade publications, and he is a frequent speaker at industry conferences and seminars.
