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Attractive Voluntary Benefits

Originally posted by United Benefit Advisors (UBA)

The Patient Protection and Affordable Care Act (PPACA) has prompted businesses to focus on minimizing exposure to rising health care costs. To show how this has played out, the 2013 United Benefit Advisors (UBA) Health Plan Survey found that most employers nationwide have already adjusted their plan designs in ways that shift more of the cost burden to employees.

However, benefits still play an important role in retention and hiring, so it’s vital for employers to maintain quality benefits offerings. That being said, how can employers effectively balance cost and quality? One way is to expand their offerings of voluntary benefits — benefits that are largely paid for by employees.
During a recent Employee Benefit News webinar, “The Hottest Voluntary Benefits for 2014,” Dale Alexander of Alexander & Company, a UBA Partner Firm, said that he sees voluntary benefits only increasing in importance as the trend of shifting costs to employees intensifies.
As a result, it’s a good idea to offer common ancillary benefits such as dental, group term life insurance, long-term disability insurance and short-term disability insurance. The UBA Ancillary Products Survey sheds some light on popular benefits by industry, size and region:
  • Not surprisingly, nearly three quarters of all employers responding offer dental coverage, with almost all large employers providing the benefit
  • Ninety-five percent of businesses replying with over 500 employees offered group term life insurance, yet only 56 percent with less than 50 employees offered this benefit, making it an area of opportunity for this sector
  • An industry breakdown of short-term disability coverage shows that 37 percent of employers responding in all major industries offer the coverage
It’s also a good idea to consider some less commonly offered benefits. Again, we look at the UBA Ancillary Products Survey:
  • A regional breakdown shows health/wellness-related membership discounts (e.g., to fitness facilities) are most popular in the Northeast, where more than 5 percent of employers answering offer the benefit to individuals (given the interest in the Northeast, other regions may see this benefit grow in popularity as well)
  • Long-term care insurance, pet insurance, identity theft insurance and auto/home insurance are still relatively rare when you look at national adoption rates, but among larger employers they have become staple offerings, making them an area of opportunity for smaller employers to also consider
Alexander said other programs that help prevent or defray medical costs — such as flexible spending accounts, cancer/accident/critical illness plans, Employee Assistance Plans and gap/medical supplement plans – are also likely to grow in popularity as employees look to cope with rising health care costs and safeguard their future.
Importantly, Alexander also noted that the rise in adoption of voluntary products changes how benefits should be offered. Since employees are responsible for paying most or all of the cost, employers need to have products that help them get the most value. One way to do this is by moving from individual products to group offerings, which can be less expensive, have better limits and features, better technology integration and easier entry for employees.
“More is being required out of employees’ pockets in the years ahead,” Alexander said. “Nationally, that is a trend. We as the benefits industry need to prepare people to have more financial margin in their lives, more money at the end of the month.”