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Emerging Trends in Employee
Benefits
E
mployers are looking for
simplification and reining in of
costs where workplace benefits
are concerned.
By Kimberly Landry
T
he employee benefits industry
has long played a vital role in the
financial security of U.S. consumers through insurance benefits sold in the
workplace. However, the benefits industry, like every other system, is not immune
to change. LIMRA surveys have identified
three emerging trends that are likely to
have an impact on this market well into the
future. Let’s take a look at each one.
Cost Control
The rising cost of benefits is becoming an
urgent issue for many companies. Employers rate controlling the costs of health
insurance, their overall benefits package
and compensation as the top three critical
issues that their companies are facing. Not
surprisingly, medical costs are the primary driver behind employers’ concerns.
As costs continue to rise, employers
are searching for ways to reduce expenses. They are exploring a variety of benefit
funding changes, although most are not
expecting to shift all benefits to a voluntary basis. Some are also investigating
private exchanges, hoping that increased
competition will place downward pressure on prices. In addition, employers are
looking at their benefit plan design as a
way to keep expenses down. Among those
employers considering plan design changes in the next two years, most of their
intended changes involve cost reduction,
such as reducing benefit levels, replacing
current plans with less expensive ones and
increasing cost-sharing for employees.
Simplified Administration
Going forward, the desire for simplification is likely to play a major role in
many facets of employee benefit sales.
Businesses are continuously trying to
InsuranceNewsNet Magazine » November 2014
accomplish more with less. This trend
extends to human resource (HR) departments, where many HR professionals
likely find that they have less time to manage increasingly complex benefits products. As a result, many employers express
a strong desire for simplicity in their benefit plan design and administration.
This preference is particularly evident
when it comes to voluntary products.
Companies looking to add a new voluntary benefit place a high importance on
product features that simplify administration. These features include the benefit being guaranteed issue, requiring a
minimum number of disclosure and enrollment forms, and allowing the same
communication messages to be used for
all employees. Employers also look for
simplicity when selecting a voluntary enrollment technology system. They prefer
a platform that is easy to use and navigate
and that allows enrollment in all benefits through the same system. Employers
place less importance on extra customizable features such as reporting capabilities
or communication add-ons.
Streamlined Communication
and Enrollment
Employers also prefer simplicity in their
approach to communicating with employees about benefits, since they often have
limited time available to devote to this
task. LIMRA surveys show that a large
majority (81 percent) of employers admit
they always use the same benefit communication strategies for all employees, even
though nearly half feel that, ideally, different communication methods should
be used for different employee populations. In addition, 49 percent of employers limit benefit communications to open
enrollment periods rather than continuing the process throughout the year.
Employers also seek to streamline the
enrollment process by holding open enrollment for voluntary and employer-paid
benefits at the same time. This practice
presents particular challenges for voluntary and worksite carriers, compelling
them to compete with medical benefits
for employees’ already limited attention
and wallet share. In addition, the majority
of companies allow employees to self-enroll in voluntary benefits, even though
this is not likely to be the best method for
achieving high employee participation.
Implications Going Forward
To succeed in this challenging environment, benefits carriers will need to adapt
to the changing needs of their customers.
As employers strive to do more with less,
the benefits industry can help by developing benefit solutions that are easier to
administer and more flexible in terms of
cost. They also can provide greater support to employers during the enrollment
process, such as by helping create the content for benefits communications and providing more convenient enrollment methods. Above all, it is essential for carriers
to maintain active lines of communication with their customers in order to track
these evolving needs and provide customized solutions.
Kimberly Landry is an
analyst in Group Insurance
Research for LIMRA. She
is responsible for conducting research on employee
benefits, with a specific focus
on compensation of group
insurance personnel and employer trends. Kimberly may be contacted at
[email protected].
As seen in InsuranceNewsNet Magazine