Insurance companies are warning that 2014 could be the worst in history for renewals. There may be a slight silver lining to the murky clouds of health care reform — ancillary benefits, or voluntary benefits. They're expected to grow substantially in the coming years. Advisers may do well to leverage these offerings with clients.
While the Affordable Care Act requires employers to offer affordable benefits that provide minimum value ¾ or pay a fine ¾ the new exchanges coming online mean less of their own budget will be going toward major medical coverage. At UBA, we see this as a new opportunity to help employers differentiate their benefits plans with ancillary benefits such as dental, life, long-term disability, critical illness and paid-time off.
One of the few things not impacted by health care reform, is that employers need to attract and retain the best employees; how they differentiate themselves, however, will vary based on their size, industry and region.
Employers can still offer employees the ability to choose from a menu of benefits that meet their employee’s needs, even if the employees pay the full cost of those benefits. Ancillary benefits on a group platform can be purchased with higher guarantee issue limits, fewer underwriting hassles and usually at a lower premium than if purchased on the individual market. Plus, many of these benefits can be paid with pre-tax dollars, which is a plus for both the employee and the employer.
To start, help employers understand what their industry and regional peers are offering. UBA just released preliminary findings from its Ancillary Products Survey, which highlights some key differences in product line popularity by employer size, industry and region.
For example, only 0.5% of the employers in the survey offer on-site clinics; however, among employers responding to the question with more than 500 employees, the average was 7.4%.
Other highlights from the survey include:
- Nearly three quarters of all employers responding offer dental coverage, with almost all large employers providing the benefit.
- A regional breakdown shows membership discounts are most popular in the Northeast where more than 5% of employers answering offer the benefit to individuals compared to less than 2% in the central part of the country.
- Ninety-five percent of businesses replying with over 500 employees offered group-term life insurance, yet only 56% with less than 50 employees offered this benefit.
- The national average for critical illness availability was just 7.9% of employers in the survey and long-term care insurance was offered by only 3% of the nation’s employers, much lower averages than are seen among large employers.
- Results show that a small to midsize business should not necessarily be comparing themselves to the national average, so be sure to help them benchmark locally.
In today’s world of employee benefits, the sit down dinner may be losing popularity, but the buffet line is growing rapidly. Smart brokers will look at this as an opportunity to help employers design an attractive menu that fits their clients’ needs.
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