One can't help but liken the impact of health care reform on companies to that of a boat amid raging waves on a vast sea. As employers struggle to find solid ground, they are left to navigate iceberg-sized challenges, including how to uphold their commitment to providing health care coverage while struggling with recession-mandated cost cuts. They've got to find effective strategies to maintain cost-control measures, and they must also quickly teach workers how to take the helm when it comes to managing more of their own health care costs.
For many organizations, supplemental or voluntary insurance policies are helping solve a number of concerns and challenges that have surfaced with the uncertainty of health care reform. Making voluntary insurance available can enhance the perceived value of an employer's core benefit plan. Employees who own supplemental insurance and have extensive medical costs may be able to offset out-of-pocket costs. Furthermore, when workers don't have to pay a lot in terms of extra medical costs, they realize just how good their major medical insurance really is.
The ability to enhance current benefits packages for employees is of even greater importance, given employers' views on the potential impact of the new health care law. As noted in the graph on page 26, 42% of employers believe health care reform will result in significantly diminished benefits for employees.1 Forward-thinking companies are anticipating that outcome and making adjustments to their benefit plans.
Many are adding voluntary or supplemental plans as they comply with the demands of reform and face the challenges of a tough economy. These measures will not only help maintain employee satisfaction with their overall benefits options, but also help differentiate the company from those who choose to cut back or settle for diminished benefits programs for their workforce.
The challenges organizations face when it comes to rising health care costs are not lost on their employees. According to the recent Aflac WorkForces Report, 38% of employees believe rising health care costs have had a very strong or strong impact on their company's ability to offer a top-notch benefits package, and 43% say it has impacted their ability to keep insurance costs low.
Despite the best intentions of the Patient Protection and Affordable Care Act (PPACA), many workers (41%) strongly disagree or somewhat disagree with the statement "I will have greater control over my health care decisions due to the health care reform."
Employees want choices
In the past, many HR decision-makers might have chosen not to make voluntary plans available that could help workers with the financial obligations of unexpected health events. Many told Aflac they didn't believe employees were interested in such options. However, the study's findings reveal that today's employees are interested in voluntary plans, with 66% saying that if their employers did not provide the type and level of health insurance they desired, they would be willing to apply for additional insurance products to ensure adequate coverage.
When asked why adding voluntary insurance plans would be important to them, the top three reasons given by employees were:
- "It offers me more options when it comes to health care coverage."
- "To meet my needs."
- "To give me more comprehensive insurance coverage."
The country's poor economy has gravely affected consumers' wallets, and it is also having a lasting influence on how workers view their income-protection strategies. More choices to bolster that protection are a must-have for many employees, given the fact that many have to bear more of the burden of the higher cost of health care.
This is evidenced by the fact that many Americans are looking at ways to help protect themselves in anticipation of health care reform. In fact, 41% of employees are doing or have already done something to prepare themselves or their family for possible changes to the health care system.
Adding voluntary insurance products not only increases an employee's insurance options, but also helps give a policyholder peace of mind and financial security. In the unexpected event of an illness or injury, policyholders receive cash benefits, unless they choose otherwise, to help pay for daily living expenses, such as rent, gas, groceries, daycare and other necessities. Because cash benefits are always welcome, the added protection voluntary insurance offers will continue to be in strong demand.
Voluntary insurance offers flexibility
Because of health care reform, the voluntary insurance sector is poised for more growth. As the cost of health insurance continues to rise and employers struggle to control their businesses' health care costs, most strategies rely on shifting more of that cost to the employee. Making supplemental insurance available at no direct cost to a company can help give its employees a soft landing, allowing them to apply for the extra financial protection they need as they take responsibility for more of their own health care costs.
Voluntary insurance policies often include critical illness, short-term disability, accident, dental, life insurance and more. There are a number of ways companies can incorporate voluntary insurance into their existing packages:
o As a complement to existing employer-paid benefits. Organizations may add voluntary short-term disability insurance to employer-paid disability coverage that's already in place. This enhances their current benefits offerings without adding additional direct costs and also can satisfy workers' needs for additional disability coverage.
o Restructure current employer-paid benefits to include employee buy-up options. Some businesses will design voluntary insurance plans that feature an employer-paid core plan, while giving employees the option to buy broader, more comprehensive coverage through voluntary options.
o Replace some employer-paid benefits with voluntary insurance plans. To avoid eliminating benefits coverage altogether due to cost constraints, employers can replace company-funded insurance with voluntary options. This allows businesses to retain coverage options at no direct cost to their bottom lines and, at the same time, help protect workers. For example, many companies that have dental and vision benefits as part of their comprehensive plans have found they can cut those expensive benefits and replace them with voluntary dental and vision plans that interested employees can pay for themselves.
Although some aspects of PPACA are already in effect, much of the law will be phased in over the next several years, and regulations to implement those parts of the law may not be published for some time. Of course compliance with the law will continue to evolve. With so much uncertainty, developing a plan to manage health care costs can be a seemingly overwhelming task.
Now is the time for HR professionals and benefits decision-makers to seek out health care benefits strategies that can be counted on to soften the impact as their employees are asked to pay more of their own health care costs. Voluntary insurance products can be part of the solution, as they have no direct cost to the company and offer workers choice in additional coverage that best suits their needs.
David Pringle, senior vice president of federal relations, has more than 30 years experience in a variety of roles at Aflac. He began his career with Aflac as a sales associate and quickly advanced to state sales coordinator. During his tenure at Aflac, Pringle was the assistant agency director for the west territory and director of training. He was appointed to his current position in 1990 to coordinate Aflac's government relations and lobbying efforts in Washington, D.C. For additional information, please visit aflac.com.
Footnote:
"2011 Aflac Workforces Report," a study conducted by Harris Interactive for Aflac, September 2010.
