Changing voluntary disability from an optional benefit to a necessity
Enrollment in voluntary benefits continues to grow, with products such as critical illness and accident insurance seeing double-digit rises in participation in recent years. However, voluntary disability appears to be trailing behind as one of the lesser understood and utilized benefits, say industry experts.
“Health products such as hospital indemnity, critical illness and accident solutions can help round out the healthcare plan. But I think when those conversations happen, quite often the life and disability plan may not get the full attention it deserves,” says Phil Bruen, vice president of group life and disability products at MetLife. “I think it is an opportunity for a broker to make sure that is part of the agenda by taking a look at the plan design.”
This is just one concern Bruen has when looking at the voluntary disability space and how participation rates can continue to improve along with the other supplemental health products like hospital indemnity and critical illness.
“It’s one thing to offer an array of benefits for an employee to see that they are being offered a comprehensive benefit plan, but the other proxy or measure of the effectiveness of those benefits is the level of participation,” Bruen says. “If you are offering a benefit that nobody is signing up for, you might question the value of the plan.”
Also see: “Who owns healthcare reform going forward?”
Integrating disability into wellness
To assist with the enrollment and participation of disability benefits, Breanna Scott, director of product management at The Standard, is seeing the integration of voluntary disability into employers’ wellness programs.
“This integration of wellness program participation and voluntary disability benefits could positively affect disability claims in the long run,” Scott says. “An employee’s participation in a robust wellness program that, for instance, includes wearable technology or a certain amount of working out with a biometric screen, may help reduce or mitigate the health conditions that could lead to a disability claim.”
Scott adds that she is also seeing voluntary disability coverage switching from fully employee paid to the employer offering some contribution toward the benefit. “Some employers are providing base coverage and allowing employees to buy additional coverage,” she says. “That way the employee could have a more robust benefit, but would then be responsible for those additional premium dollars.”
Also see: “An accurate definition of wellness.”
Educating the masses
Having a better understanding of what voluntary disability, short or long term, can do for an individual is another way to boost participation. Joe Ellis, senior vice president at CBIZ Human Capital Services, says the best way to gain participation is by having someone who has used the benefit explain how it assisted them.
“There’s no better person to tell you about car insurance than the person who has just been in an accident and got a check,” Ellis says. “I think you need to engage coworkers. To the extent that they can, tell the stories about how they used disability.”
Many individuals misunderstand what disability can do, and anecdotes about real life applications can help to clear up those misunderstandings.
Aflac recently released a list of such common misconceptions. The study showed that when an employee is injured and cannot work for a period of time, many assume they will receive benefits from Social Security or workers’ compensation. However, that is often not the case. Between 2005 and 2014, the percentage of applicants awarded Social Security benefits at the initial claims level averaged 23% and the average monthly Social Security benefit paid to disabled Americans in 2016 was only $1,166.
“I think the biggest pressure point advisers and brokers can address is helping employees better understand the importance of voluntary disability insurance,” Scott says. “A lack of education about the need for disability insurance and how it works can negatively affect enrollment and leave employees susceptible to a loss of income if they weren’t able to work due to an illness or injury.”
Bruen is seeing more employers switch to an auto enrollment process for their voluntary benefits, such as voluntary disability, and have continued to a see a rise in participation because of it.
“We are definitely seeing some more interest in auto enroll or default enrollment,” Bruen says. “An employer will communicate to their employees in advance that they are being pre-enrolled in the disability plan, outline the benefits as to why they should consider maintaining enrollment, and then give the opportunity for the employee to opt out if they choose.”