INTEGRATION IS THE KEY STRATEGY IN BENEFITS OFFERINGS THIS YEAR

By Gil Lowerre, CEBS, CLU, CHFC, President; Bonnie Brazzell, Vice President, Eastbridge Consulting Group

Employers have long used their benefit plans to help differentiate their companies from others in the job market. Most view benefits as a central part of their compensation packages, a way to improve morale and productivity, and a way to attract and retain employees.

Even given the difficult and shifting economy, employers still remain committed to workplace benefits. They understand that as the job market heats up, the pressure to have a large variety of high-quality insurance coverages and non-insurance benefits will once again be a major factor. Benefits are a key factor of a potential employee’s decision to work at a company and an existing employee’s decision to stay.

Assess the Most Appropriate Benefits

Employers, however, may find their benefits decisions taking a toll on their bottom line and on employee satisfaction if they choose to ignore the importance of integrating all aspects of their benefits offering. These employers run the risk of not being in compliance with ACA rules and regulations, which may cause them to incur fines and penalties, as well as not having a benefits strategy that adequately plugs coverage gaps for employees.

More than anything else, ACA will create a new normal around plans with 60 or 70 percent actuarial value. Assessing the most appropriate complementary benefits to address this out-of-pocket exposure is something that requires attention in the year ahead.

Employers that do not integrate benefits also are in danger of lacking a comprehensive benefits program that meets the majority of employee needs and/or not offering the best-of-class products, thus hurting their ability to recruit and retain employees. In recent years, employers have attempted to differentiate themselves by offering tailored core benefits and a smattering of ancillary/voluntary plan options. They often relied on an advisor for medical and/or other core coverages, another for voluntary/ancillary products, and even a third for enrollment design and management. But the time has come when these components can no longer be considered as separate strategies—and when employers choosing to remain static will feel the shock.

Brokers can help employers sift through the myriad of options to achieve an integrated approach to benefits. In fact, most employers already use the services of a broker, according to an Eastbridge report surveying more than 700 employers. (See Figure 1)

Today, most brokers serve as a personal shopper for workplace insurance and enrollment services. We find that employers prefer to use brokers to comparison shop the traditional core, voluntary, and enrollment options. They then take the information gathered, researched, and recommended by the broker to do their own due diligence and come to a decision.

This has become especially important as employers realize the key to competing successfully in the job market is to provide a broad range of benefits containing a core plan (or plans), a myriad of voluntary and ancillary products to meet their employees’ varied needs, and enrollment services that are geared towards the employee and supporting their benefits decisions.

Moreover, as products and platforms evolve quickly under ACA, employers must make sure they have competent advisors/brokers who know the full breadth of the market. They need to be experts about ACA, products, funding options, and platforms, as well as experts at helping design a comprehensive benefit strategy encompassing all of these things.

The advent of ACA has brought commoditization of medical plans and, for more and more employers, the move to a defined contribution strategy. The latter is driven by cost control issues and effectively puts core and voluntary benefits on the same footing — a menu of benefits (core and voluntary) with a sum of money for the employee to spend on benefits. Defined contribution makes everything voluntary (except medical, which is mandated one way or the other), allowing benefits to finally become controllable costs.

As employers move to defined contribution, and to the degree products look more alike to the consumer, the overall plan may be increasingly differentiated by the amount of money the employers put in as their defined contribution. Consider 401ks — the individual funds no longer distinguish one plan from the other (consumers rarely study the difference between the funds in two plans), and more often employees focus on the matching contribution that employers offer. As a result, design differentiation is diminished as core plans become more similar, raising the importance of employers’ funding differentiation whether through cost shifting, defined contribution, or some other mechanism.

Voluntary/ancillary benefits: More choices, greater flexibility, and higher quality

Other aspects of the benefit plan are not as static, however. By default, they are becoming more important in helping employers compete for the best employees. One is the voluntary/ancillary offering. No longer will voluntary benefits be an “afterthought” or a response to employee demand but rather an important tool for employers to manage their benefits — just as important as the traditional employer-funded benefits. More benefits, greater flexibility, and higher quality are all hallmarks of this change. In fact, more than three-quarters of employers with 10-100 employees offer at least one voluntary product, according to our survey. That percentage increases with larger employers. (See Figure 2)

Employers offer more and more offer voluntary plans as a response to decisions made regarding core benefits. For example, hospital income, critical illness, accident, and gap plans are increasingly positioned as a way to help employees pay out-of-pocket expenses resulting from changes in their core medical plans, gaps in coverage, or areas not adequately covered in the core plans. Some core plans have moved to voluntary as employers try to contain costs. Dental is an example of a benefit that once was part of a former core plan that is much more frequently offered a voluntary benefit now (See Figure 3).

Differentiated voluntary offering by employee class (executives vs. other employees) are also a response to core plan standardization. All of this suggests that the two — core and voluntary strategies — must be seen as a whole. Enrollment processes will increasingly offer both sets of products together, as they will relate more closely to each other.

Integrated Enrollment Processes are Improving

The benefits platform is also changing as employees look for convenience and simplicity in their benefits decision-making. Selfenrollment using a paper enrollment form is no longer the most common method of enrollment and telephonic methods are also still fairly uncommon. Self-enroll via a website is the most preferred and used by employees. (See Figure 4)

The enrollment process is evolving, too, becoming more employee-friendly and supportive. There are better enrollment systems with Internet/Intranet, laptop, and call center-based options. There is better decision support, not just education about available products, so employees can make an informed and beneficial purchasing decision. There are also more self-service options available 24/ 7, making it easier for employees to enroll in the benefits they want and need. Access to enrollment is also simpler with single sign-on integration into a company’s HR portal.

As this new decade progresses, employers should consider refocusing their benefit strategies not just on medical or even core benefits, but on all benefits (insurance, non-insurance, wellness, perks, etc.) and the way those benefits are presented, maintained, and serviced. Their success will depend upon providing employees with an integrated yet comprehensive benefits solution that considers ACA impacts — which includes core and voluntary benefits as well as enrollment process — to meet their individual needs and then giving them the information they need to make an informed and beneficial purchasing decisions.

Gil Lowerre founded Eastbridge Consulting Group, a leading U.S. consultancy specializing in voluntary product and work site marketing. Bonnie Brazzell is a leading expert on work site marketing of financial services products. She joined Eastbridge in 1999 and manages consulting projects for both worksite/voluntary and group clients.

More Supplemental Health Benefits Articles

Open Enrollment and Millennial Workers: The Focus is on Financial Independence

Millennial workers take it on the chin when it comes to the public’s perception of their job habits. The buzz is that they’re job hoppers who want immediate rewards and rapid promotions for little effort.

Bueller? Bueller? How Much Do Absent Workers Cost Employers?

It’s time to take a stand against two of the most dangerous epidemics in today’s corporate world: absenteeism and presenteeism.

After ACA, Employers Coming out of the Dark

Immediately after the Affordable Care Act was passed, we saw employers somewhat withdraw and make few changes, if any, to their non-medical benefits programs as they tried to understand how to comply with the new laws. While not all questions about ACA have been answered, more employers are looking to

Post-Heath Care Reform, Voluntary Benefits Options Take Center Stage

In a health care landscape that is constantly evolving, one thing is certain: voluntary insurance is in demand.

SOURCE