With the Health and Benefits Leadership Conference fast approaching, it’s important to prepare by brushing up on some of the industry's hot topics. And, among those topics, voluntary benefits -- and their implications for healthcare-- is one of the hottest.
Voluntary benefits are benefits that employees choose -- like life and disability, critical-illness and accident insurance; and pet coverage, ID theft protection, legal services and financial counseling. They're offered through an employer but paid for partially or solely by workers through payroll deferral; a particular advantage is that they empower employees to personalize their benefits packages to fit their lifestyles.
This is important when it comes to healthcare. Voluntary benefits work well alongside high-deductible health plans (HDHP) because they meet employees' specific needs and help them with coverage gaps.
When voluntary benefits are not offered alongside HDHPs, employees tend to enroll in traditional PPO plans instead.
Regardless of that fact, some employers are not providing multiple options. PwC's 2016 survey found that the percentage of employers offering only HDHPs had doubled since 2012, reaching 24 percent of the 1,150 organizations surveyed. So, clearly, employees need to understand what they are being offered and how they can make these benefits work for them.
And the accompanying question is, why are voluntary benefits important for employers, as well, and how can they better educate employees and encourage them to participate?
Keeping costs manageable
Employers can avoid the Cadillac Tax and reduce their healthcare costs by adopting consumer-driven health plans and HDHPs. The 2015 Employer Health Benefits survey from the Kaiser Family Foundation, which surveyed 3,191 firms, found that 24 percent of workers were enrolled in HDHPs, a significant increase from the 20 percent enrolled in 2014.
Additionally, the National Business Group on Health found in its 2015 survey of 136 business group members that large employers were moving to consumer-directed healthcare. Forty-nine percent were offering it as an option to their employees.
This increase in both employers offering consumer-directed healthcare, and employees wanting it, indicates that HDHPs are trending. Employees are taking on the responsibility of high deductibles.
While employees may have the opportunity to manage their health and their plans, many aren’t equipped to do so. The 2015 Aflac WorkForces Report found that 52 percent of the 5,337 employees surveyed had $1,000 or less to pay unexpected out-of-pocket medical expenses, and 44 percent said they would have to borrow from their 401(k)s or use credit cards to cover those expenses.
Providing voluntary benefits helps employees manage these costs without adding extra expenses for employers. For example, if the selected health plan does not cover eye exams, a voluntary vision plan could help cover those costs if the employee chooses to add it to his or her benefits plan.
Rising costs for medical coverage and changes in healthcare reform are contributing factors in the noticeable growing need for voluntary insurance benefits.
Providing individual freedom
If there’s one thing certain about voluntary benefits, it’s that they give employees the freedom to choose. Sixty percent of the 1,203 employees surveyed by MetLife in 2014 said they were willing to bear more of the cost of their benefits, in order to have more choices to better meet their needs.
In addition, 80 percent said they valued more personalized benefits geared to their circumstances and age.
Educating employees on benefits
The knowledge gap is staggering when one looks at healthcare benefits. A survey conducted in February 2016 by the International Foundation of Employee Benefit Plans (IFEBP) found that most employees were confused by their benefits, and an alarming 80 percent of the 340 employers surveyed didn't think their employees even opened or read information they provided about them.
Employees want to be able to understand the benefits they receive, but there is a need for a faster and clearer method of communicating these options. The 2014 and 2015 Employee Benefit Trends Study from Metlife found that more than half of the 2,463 employees surveyed from small, medium, and large-sized companies said their employers' benefits communications failed to effectively educate them about their options.
Employees need effective communication to have confidence in selecting their benefits.
Millennials are the largest group to use voluntary benefits, and they want as much benefits information as they can get. Aflac’s 2015 WorkForces report found that 64 percent of the 5,337 millennials surveyed said benefits were extremely or very important to employer loyalty, and that they should know their options.
Since employers are offering a benefit that millennials are most receptive to, company communications should be targeted at them, as well as those who previously selected HDHPs.
Technology helps in communication efforts. Unfortunately, fewer than half of the organizations surveyed by IFEBP said they had tried nontraditional benefits communication like video, social media, text messages, automated calls or games.
What should your company do in this regard? Utilize applications, online guides and digital media to explain why voluntary benefits are important to employees and to also share the options being offered. Bridging this knowledge gap benefits both the employer and the employee, and that alone is a good reason you should consider starting down this path today.
How are you communicating the importance of voluntary benefits and HDHPs to your employees?