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.
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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: [email protected]
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