Voluntary Benefits: No Longer Voluntary for Employers (A White Paper)

The evolution of voluntary benefits – that is, those made available by employers but typically funded by employees – over the last five to ten years is truly significant. Once considered a burden that just wasn’t sought after enough by employees to be worth the effort, voluntary is now a critical component to many corporate benefits packages. It offers a win-win-win solution for employers, employees and vendors alike. It allows employees access to more customized products and services without the employer needing to shoulder the cost, in a time when rising healthcare costs are already keeping them up at night.Voluntary Benefits

In this white paper, we’ll take a deep dive into this market shift and uncover the advantages of voluntary programs for all stakeholders. We’ll also share tips and best practices for getting started – or maintaining – your voluntary benefits program, as well as point out potential pitfalls of voluntary plans and how to avoid them. We’ll discuss things like plan design, workforce demographics, ERISA, program communications and other factors that come into play.

Whether you’re already offering voluntary benefits or are considering starting, you’ll want to read our advice and guidelines. We’ve been helping clients navigate these tricky waters for years, and have picked up quite a few tricks of the trade along the way! Fill out the form below for your copy of the white paper, “Voluntary Benefits: No Longer Voluntary for Employers.”

 

 

Watch the Webinar: ERISA Considerations for Voluntary Plans

Once a bit of an afterthought, voluntary benefits are now quite mainstream and used as a tool for employers to provide top-notch, competitive benefits to employees while not increasing their costs. At a time when organizations are struggling to battle the rising costs of healthcare while retaining and recruiting top talent, many have recognized the value of a voluntary program in recent years. With such increased popularity, it’s important for employers to understand all the legal ramifications of their offerings.ERISA voluntary benefits

The Employee Retirement Income Act of 1974 (ERISA) is a federal law that outlines standards for certain pension and health plans. ERISA effectively guides what an employer is allowed and prohibited from doing when it comes to establishing, maintaining and publicizing these benefits. When it comes to voluntary plans, its relationship with ERISA is a bit murky:

  • which plans does ERISA apply to?
  • what is the safe harbor policy?
  • what are the consequences of violating ERISA for voluntary?

In this recorded webinar, I explain the answers to these questions and more. Failing compliance when it comes to voluntary and ERISA is likely a misunderstanding that your organization cannot afford, and it’s important to know the legal nuances that exist when talking about ERISA and voluntary benefits vs. other types. With many employers turning to voluntary programs to solve some of their benefits challenges, it’s critical that they are executed within the realms of the law.

Fill out the form below to learn all about this complex topic. I’ll outline key points and info and you’ll be able to listen to real questions asked by your peers.

 

5 Potential Pitfalls of Voluntary Benefits & How to Avoid Them

You already read that Voluntary Benefits Are No Longer Voluntary for Employers. Now it’s time to dig deeper into Voluntary Benefits best practices- program design, what constitutes success when it comes to voluntary benefits and outline tips to prevent an ineffective voluntary program.

The term voluntary benefits was coined long ago when employers fully funded (or significantly subsidized) core benefits and voluntary benefits were an add-on, paid for by the employee through payroll deductions.  As the landscape changed, core benefits evolved to be partially funded by employers and partially funded through payroll deductions. As a result, many benefits became voluntary.

For today’s employees, it’s not as simple as core and voluntary; it’s about choice.  Employees need to balance what limited disposable income they have for all benefits, regardless of what they are labeled. Even still, the concept of core and voluntary resonates with employers as an industry norm, so it’s important to identify ways to avoid common pitfalls of voluntary program implementation:

  1. Think holistically
  2. Don’t forget about ERISA
  3. Consider enrollment options as a critical component in overall design
  4. Remember that education is key
  5. Help employees get the most from their plan

Think Holistically About Voluntary BenefitsVoluntary Benefits Tips

Many employers think offering voluntary benefits is like checking a box – something that can be done quickly and without much deliberation. However, programs without thoughtful preparation are rarely successful in terms of education, enrollment and satisfaction.  Voluntary benefits should be considered an integral part of the overall benefits package.  A strong offering should take into account various factors, including but not limited to:

Current population:

Although a one-size-fits-all approach does not and should not exist, employee demographics can help you pinpoint which products would be most sensible for your collective audience.  Generally speaking,                  those that are starting out in their careers have different priorities than those nearing retirement, and employees falling somewhere in the middle of the spectrum will have their own set of benefits needs as                well.  For example, accident insurance is more popular for families than for singles or empty nesters, while student loan repayment is more relevant for those in their 20’s and 30’s than for older employees.

Current benefit offering:

When considered in tandem, voluntary benefits can serve to protect employees and reduce their risk or perceived risk for various physical or financial troubles.  For example, introducing a high deductible                   health plan offering complementary voluntary products (i.e. hospital indemnity, critical illness, accident insurance) can help decrease the financial burden on employees.

Don’t Forget About ERISA Considerations for Voluntary Benefits

Voluntary Benefits Best PracticesVoluntary benefit programs may or may not be subject to the Employee Retirement Income Security Act of 1974 (ERISA), depending on how they are structured and supported by the employer.  ERISA provides important protections but can also pose constraints for employers and employees.  Assuming you do not want your voluntary programs to be covered under ERISA, you must be careful to manage enrollment and administration separately from your core benefit programs.  If you would like your voluntary plans to be subject to ERISA, then coordinating administration and enrollment will not be problematic; however, understand the potential impacts.  ERISA compliance and your potential fiduciary duties should never be an afterthought.

Consider Enrollment Options as a Critical Component in Overall Design

Our research affirms that employees better understand the offering and have higher enrollment when they participate in group meetings or individual meetings.  In addition, vendor partners are often willing to offer more competitive pricing and waive enrollment requirements if they can meet with employees directly or send them some type of material in the mail.

While some employers welcome the “free” education and enrollment, others are concerned about aggressive selling or having employees using work hours to meet with potential vendors.  If you think of voluntary benefits as part of your holistic offering, then leveraging work hours will be less of an apprehension when voluntary is an element of your complete attraction and retention tool.

The key is to think about the enrollment process as an essential design component of your voluntary program.  Ensure that decisions surrounding enrollment fit with the overall program strategy and make sense for your population.  Providing comprehensive enrollment with core and voluntary may be a best practice for your group.  This allows employees to make coordinated decisions regarding their contributions and programs.  It also enables you to offer complementary plans for optimal plan selection.  While that structure works for some, other employers feel employees have too many decisions to make during annual enrollment and prefer to stagger voluntary enrollment to allow more time for thoughtful decision making. There’s no right or wrong answer – each company and population is different.

Remember that Education is Important

Decision support tools have continued to evolve, providing employees with strong advocacy for traditional plans and voluntary benefits alike.  Although voluntary benefits are designed to be less complex and easier to understand, for some employees the language is new.  Summarizing the program(s) and sharing scenarios to help employees understand the products is often the best way to introduce a new plan.Voluntary Benefits Enrollment

Regardless of who funds the program, as the employer it is important that you educate your employees on the available offering.  Employees should not elect a benefit they do not understand and employers should not offer benefits that are not valued by employees, or that employers themselves cannot explain effectively.  Every dollar spent on voluntary benefits is money your employees are not spending on other necessities like monthly bills, student debt, groceries, emergency savings, or even 401k contributions; make sure they are knowledgeable about what they are buying and ensure that it’s a competitive product in the market.

Education can be facilitated in many ways including traditional employee meetings, brochures, benefit fairs, and onsite sessions with vendors.  At Spring we have also assisted clients with quick videos that provide the highlights of a program and generate interest.  These videos have been well received and employees are able to retain the information from a creative video more easily than a detailed presentation.  Videos are also shareable and can be viewed by family members who may be a critical part of the decision-making process.

Help Employees Make the Most of the Plan

Voluntary Benefits Vendors

After you have implemented a voluntary program and educated your membership it’s important that you continue to monitor the program and assist your employees in optimization.  Sometimes employees forget about the benefits they have available to them and continue to make monthly contributions to plans but they neglect to file claims because they don’t remember what they have elected.  A few simple actions can help your employees make the most of the plan:

  • Send a quarterly newsletter to all employees, or just those enrolled in voluntary benefits. This will give you the opportunity to remind them of the program benefits.  It can also help facilitate changes (i.e. enrolling spouses, children) and provide an opportunity to ask questions.
  • Partner with your vendors. For example, if you have a purchase program in place, they often run specials and send postcard reminders.  Take advantage of those specials!  Perhaps you could run a joint wellness campaign linked to specials on health equipment.  Ask if they would be willing to raffle off something like a treadmill or vacation to align with your wellness strategy.
  • Remind your employees to file claims. Even if you cannot leverage actual data, you can send a reminder at the midpoint of every year for wellness visits with a link to the claim form.  For example, most critical illness and accident plans offer a wellness rider – find out how many employees use that benefit and try to increase that percentage.
  • Ensure the program remains competitive from a pricing and design standpoint. Employees should feel assured that the benefit they’re purchasing through their employer remains is top tier.

Taking the above factors into account will help you establish a voluntary benefit offering that is accessible and relevant to your employees and that is well worth the effort on your part. Today’s workforce has come to expect more than just the basics when it comes to benefits, and voluntary products allow you to diversify your benefits package, keeping you competitive with market standards without any significant cost increase.

However, it is not enough merely to offer voluntary products and services – they need to be the right ones for your population, they need to be communicated effectively, they need to be readily understood, they need to account for regulations like ERISA, they need to be fully utilized and they need to be rolled out in a way that makes sense for your organization. By covering these bases you’ll be able to avoid the most common pitfalls and successfully offer a valued voluntary benefits programs.

Why Voluntary Benefits Are No Longer Voluntary for Employers

Are You Missing an Opportunity?

By Karen English, CPCU, ARM and Lai-Sahn Hackett, CPDM

Introduction to Voluntary Benefits

Gone are the days of “voluntary” being frowned upon in the workplace.  We are past the stage of employer unease with the concept and the resulting worry about “selling” to employees.  Instead, voluntary benefits have become a welcome addition – some would even say critical – yielding increasingly competitive employee benefits packages that couldn’t be offered without them.

we are at a point where employers welcome voluntary benefits, yielding increasingly competitive employee benefits packages that couldn’t have been reached without them.Voluntary Benefits Dental Insurance

Voluntary benefits are insurance products or services made available by employers, but paid for by employees.   They are typically offered at lower rates than employees can find on their own, and provide a degree of choice beyond an employer’s core benefit offering.  There are a number of insurance carriers that underwrite them with products ranging from traditional life, disability, dental and vision to emerging concepts such as critical illness, identity theft protection and student loan repayment.

Employers like voluntary benefits because they make their packages stronger and tailored to the wants and needs of their specific workforce. Employees like them because they are easily accessible, pre-vetted, discounted and more diverse than traditional benefits. Carriers, brokers and consultants like them because they are a needed extension of employer core offerings.

Employer Need

Voluntary Employee BenefitsIn today’s competitive environment, employers are striving to maintain relevant benefit offerings despite increasing costs and the continuing uncertainty of healthcare reform.  The constant need to attract and retain talent and increase productivity is even further challenged by evolving workforce demographics and degree of consumerism being applied to every interaction. Further, a recent survey found that sixty percent of employees are likely to take a job with lower pay but better benefits, emphasizing the importance of a robust benefits program made possible, in part, through voluntary products1.

However, it should not be looked at with a one-size-fits-all approach. Employers can no longer look across their employee populations and make a short list of benefits that will fulfill their collective needs.  With millennials now equaling the baby boomers in number, and generation X’ers on their way to surpassing both, employers need to think about not only age and gender, but also personas within these segments, such as what is warranted by income and lifestyle2.

Market Response

In recognition of these needs, insurance carriers have expanded their capabilities beyond what are typically core employer-paid benefits to what are often referred to as supplemental employee-paid benefits that can either be stand-alone or structured as buy-ups to core plans.  This expansion has opened up possibilities for employers, as they are no longer subject to a subset of specialty carriers and brokers with limited and often self-serving products. They instead can turn to over twenty3 of the most recognized life and health carriers to fulfill the widespread needs of their employees.Voluntary Benefits Trends

These carriers are partnering with employers, brokers and consultants to design voluntary programs that will resonate with employee populations.  Whether it is employee health, wealth, security and/or personal needs that an employer is looking to address, the products that can respond are broad, appealing and growing.  Considering the category of health, for example – accident, critical illness, dental and hospital indemnity are among the most common voluntary benefits offered4.  Within the category of wealth – optional disability, financial counseling and student loan repayment are highly popular. With respect to security, identity theft protection is projected to be the fastest growing voluntary benefit and within the personal sphere, pet insurance is following suit5.

How to Get Started

If you are grappling with how to find that happy medium for your workforce, taking the following steps will give you a start.

1. First and foremost, assess what your employees are interested in. At this point of conducting employee surveys and/or focus groups, you aren’t making any promises, just trying to listen and understand which voluntary products would be more valued than others.Voluntary Benefits Prices

2. Armed with this information, consider what your population can afford. You may find, for example, that six voluntary products are of most interest to your workforce. This doesn’t mean that employees can afford to buy all six.  In fact, we find that no matter how many are offered, employees purchase no more than three voluntary products at any given time6.

3. From here, think about resources to enroll and administer voluntary benefits. You may already have a technology platform you will want to leverage, or existing relationships with a set of carriers and enrollment firms that can help streamline the process.

Employee Benefits Communications4. Lastly and most importantly, contemplate not only how you will communicate their availability, but ultimately why employees should consider them. Employee education is critical to the reception of voluntary benefits, and the value proposition or “need” has to be clear for a benefit to even be considered7. This need should ideally be developed and communicated prior to the enrollment period, not during enrollment when the employee has likely already made up their mind and is not as open to processing new information.

Conclusion

In closing, the world of voluntary benefits looks very different than it did even five years ago. This shift is a result of a variety of factors including the rising costs of healthcare, changing workforce demographics, the increasing customizability of services in general, and the growing challenges presented by recruitment and retention. We are at a moment in time where stakeholders – employers, employees, carriers, brokers/consultants and more – are aligned and where there are great options for all parties.  The opportunities are endless and can be considered as a short-term strategy for now, with a longer-term view established based on the initial roll-out results.

 

Sources:

2016 Aflac WorkForces Report, op.cit
Pew Research Center, Millennials Overtake Baby Boomers as America’s Largest Generation, April 25, 2016
3 Spring Consulting Group Voluntary Pulse Market Update, 2016
4 Spring Consulting Group Voluntary Market Pulse, 2016
5 Willis Towers Watson Voluntary Benefits Survey, 2016
6 Spring Consulting Group Voluntary Employee Pulse, 2015
7 Spring Consulting Group Voluntary Employee Pulse, 2016

Spring Consultants to Present Voluntary Benefits to Industry Organization

Karen English, Spring Consulting Group

Karen English, Spring Consulting Group

It was recently announced that Spring Partners and Consultants Karen English and Teri Weber, will be presenting Voluntary Benefits at an upcoming meeting of the New England Employee Benefits Council (NEEBC).

The presentation, titled “Voluntary Offerings:  From Auto to Zebra Coverage,” will kick off by summarizing the current landscape and providing some primary research about the pulse of the market which includes key trends, marketplace changes and benchmarks.

From there, experts will discuss the evaluation process including determining if your organization is well positioned for voluntary benefits, how to implement a best in class strategy including identifying partners, defining the employee experience and rolling out a successful program.

teri weber spring consulting group

Teri Weber, Spring Consulting Group

The session will wrap up with employer panelists providing unique and detailed insights from their experiences and addressing your questions.

English and Weber will be joined in the presentation by Joanne Abate, Assistant Vice President, Global Health and Insurance Programs at UNUM and Lydia Jilek, Senior Consultant, Voluntary Benefits at Willis Towers Watson.

The event will take place on Thursday, October 6th from 8:30am-12:00pm with Registration and Breakfast from 8:00am-8:30am at Waltham Woods Conference Center, 860 Winter Street, Waltham, MA.

More information on the event can be found here or by calling 781-684-8700.

Identity Theft Coverage Now a Tax Deductible Employee Benefit

identity theft coverage

Image credit: GotCredit via flickr

With the growing threat of data breaches and hacking incidents on the rise, having identity theft protection is quickly becoming as important as home or auto coverage. Forward-thinking employers looking to attract and retain top talent have been adding identity theft protection to the benefit offerings, but to date, there has been no financial incentive to do so for the employer.

The U.S. Internal Revenue Service (IRS) recently announced in Announcement 2016-22, that identity theft protection could be offered to employees on a tax-free basis regardless of a prior data breach. In the past, the IRS has offered the tax-free perk to employers ONLY if a data breach has occurred. This latest move allows employers to move from being reactive to proactive and use identity theft coverage as an attractive perk.

Spring is a market leader in developing the most attractive and appropriate employee benefit packages for employers of all sizes. We offer an excellent Financial Protection Plus identity theft protection product for individuals and families, through a relationship with LifeLock; the leader in Identity theft protection for ID and credit fraud.

LifeLock provides a series of proactive services to protect your employees’ identity and provides a Million Dollar Protection™ Package.

For less than $10 per month, employees can purchase protection against identity theft, ID and credit fraud and more.

Services are available for individuals and families via online enrollment through secure, encrypted servers.

For more information on how you can get these critical services to offer to your employees, please contact our team today!

Study Shows That Employers Have a Lot of Work to Do with Benefits

employer benefitWith health insurance rates on the rise and the job market improving, employers are quickly finding it more difficult to recruit and retain good employees. Many businesses have placed their focus on making their workplace and benefits packages more inviting and appealing.  Unfortunately for them, according to a recent study, they aren’t doing enough.

Benefit provider Unum recently released the findings of an interesting survey which found that only 49% of those polled considered their company an excellent or very good place to work. Further, only 47% of the survey participants that were offered benefits by their employer considered the benefits excellent or very good.

The survey was conducted online and consisted of 1,521 working adults in the United States.

Clearly there is much room for employers to improve both workplace and benefit offerings. There is much to be said for the connection between an employee’s satisfaction with their benefit package and their perception of their workplace. The two are certainly connected and improving your benefits should give you a head start in improving things around the office.

See also: How To Make Your Voluntary Benefits Program What Your Employees Really Want!

One simple way in which employers can improve their employees’ opinion of their benefit package is to simply find out what it is that employees want and craft their package around those findings. We have found that often, what an employer perceives to be important in a benefit package isn’t necessarily the same as what their employees are looking for. Voluntary benefits can play a very important role in this process.

Voluntary benefits offer employers the creativity to make helpful products available to employees that they wouldn’t otherwise have access to. By adding desirable voluntary products to an employee benefit package, an employer not only makes it more appealing to their current employees, but also gives that employer an advantage over their competition when recruiting new employees.

Need assistance identifying the right voluntary products to offer your employees and properly implementing them? Contact our team of employee benefit professionals who will be more than helpful in building you a package of products that will enrich the lives of your employee’s and help improve your recruitment and retention efforts.

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