A Case for Voluntary Benefits in 2021 and Beyond
As the advent of COVID-19 continues to shape our lives it’s also shaping the benefits landscape and the conversations we’re having with employers. Mental health services, critical illness coverage, telehealth and virtual care are surfacing as high priorities for employees.
There are numerous surveys that have been conducted over the past year that highlight job loss and unexpected medical expenses due to the circumstances that surround us. Because of this we’ve seen voluntary benefits step to the forefront of our conversations as employers and employees alike are looking for ways to address many of their specific need’s and to help them overcome the challenges imposed by the pandemic. Voluntary benefits fill a gap left by traditional medical coverage and employer paid benefits.
AFLAC’s year end 2020 survey shows that rising medical costs, insurance costs, and increased insurance deductibles and copayments as three of the top reasons why employers are suddenly considering their voluntary benefits offerings.
It’s not to say that voluntary benefits weren’t important prior to this global pandemic, but it is true that they weren’t necessarily a tool that was in the majority of employers toolboxes. One of the reasons why voluntary benefits have had a slow adoption rate amongst employers is because often times they’re not fully understood. Voluntary benefits are supplemental benefits offered by an employer and employees have the option to opt in if they want the additional coverage. Voluntary benefits are more often than not 100% employee paid and cost nothing to the employer who offers them. In fact, it may even reduce employer costs on some of the ancillary group policies that are already in place, such as, group life and disability insurance (if you go through the same carrier). It’s important to remember that health needs are unique to individuals and although the majority of employees will likely opt out, there may be a few who would really benefit by opting in. It can be a pretty powerful package to combine an accident product with critical illness and a hospital indemnity plan but employees need to understand it and need help making decisions on whether or not it’s right for them. If you leverage your broker and vendor partners for education on these additional benefit options it may help you in attracting and retaining the best talent.
Now I won’t say that all of these products are perfect, in fact, if you had purchased a critical illness policy before the pandemic it may not have covered expenses relating to COVID-19 and probably only covered things like organ failure, heart attack, stroke and cancer. That being said, many of the carriers who offer critical illness insurance have revamped it to include coverage for COVID-19, naming it Critical Illness and Infectious Disease coverage. This change provides broader coverage and would give protection in the event of another unforeseen pandemic relating to infectious diseases.
One of the products that could have filled a gap due to care for COVID would have been a Hospital Indemnity plan. This chart is from Hickok and Boardman’s 2020 Vermont Benefits Survey and