How employers are meeting demands for bigger, better voluntary plans
Voluntary products remain a strong component of the benefit menu of the overwhelming majority of employers, the 2016 Employee Benefit News annual survey on this topic reveals. Some priority shifts are evident, however, under the broad voluntary umbrella.
And while 87% of survey participants have voluntary offerings, many voice concerns about inappropriate products being pushed by overzealous commission-based brokers. Employers also remain vigilant about the risk of adding more burdens to their own plates with each new offering, even as vendors streamline and take the paper out of enrollment and billing processes.
These findings come from more than 300 responses of HR, benefits and other senior managers representing a variety of industries that took part in EBN’s annual voluntary benefits survey, conducted by SourceMedia Research. The survey featured both quantitative and qualitative responses.
Meanwhile, employers also hear appeals from employees to expand benefit offerings, and the voluntary route has proven to be a successful means of doing so on an affordable basis. For example, several employees at W.K. Dickson & Co., a leading Charlotte, N.C.-based civil engineering consulting firm, had requested a broader vision benefit. The employer-paid offering, which is part of the company’s medical plan, covers annual eye exams and contributes toward the cost of lenses or frames.
“We added a voluntary vision component last year” to enable employees and their dependents to expand the scope of the vision coverage, reports Jennifer Golynsky, the nearly 100-year-old company’s director of human resources. What’s more, despite the clear indication that the benefit would be widely used, W.K. Dickson was not hit by any adverse selection-based surcharges.
According to the survey, vision is the second-ranked voluntary benefit for 2016 based on the percentage of survey respondents who labeled it “in high demand” by employees. But unlike dental, the top ranked benefit, the survey data suggests that an equilibrium exists with vision. Why? Nearly the same proportion of employers report that it is in high demand and offer the benefit.
Contrastly, employee demand for dental, concierge services, supplemental health and loan/credit voluntary benefits appear to exceed actual offerings by employers. That gap is highest, proportionately, for voluntary concierge services, offered by only 5% of survey respondents but reported in high demand by one-third.
Naturally, not every demand for benefits can be met, even when employees bear the brunt of paying for it. Yet many survey participants interviewed by Employee Benefit News are not troubled by offering voluntary benefits that are only lightly utilized — provided, however, that they don’t become overburdened by administering the programs.
“I don’t care how many we have, as long as the broker is doing a good job [with every product],” says Nick Howell, director of human resources for The Villages, the largest not-for-profit child and family care services agency in Indiana.
Employees like choices
Besides, he says, “younger employees like to have a lot of choices.”
The Villages currently offers voluntary critical illness, accident and auto insurance coverage, along with discount programs. On deck for next year: life and vision benefits. As someone who has personally benefited from having a critical illness policy, Howell says he can recommend it enthusiastically to employees.
Some voluntary benefits, no matter how many or few are on the menu competing for employee dollars, are unlikely to ever gain a lot of traction. An example is pet insurance that was in the cellar this year and last in the “in high demand” rankings.
As is typical with other employers, utilization of pet insurance is low among the approximately 400 employees of Smoothie King Enterprises, Inc., according to Vice President of Human Resources Doug Mittelstaedt. But from his perspective, so long as his time is not disproportionately consumed by a low-utilization voluntary benefit, there is no harm maintaining it on the menu.
But Mittelstaedt expresses greater enthusiasm for a newly instituted benefit: gym membership. “It ties in with our mission statement; we want our employees to have a healthy and active lifestyle,” a fitting goal for a company whose product line consists of nutritional drinks.
Affordability of voluntary benefits can be a challenge at some organizations. That’s the case at DePaul Industries, a self-described “comprehensive outsourcing specialist” focusing on placing employees with disabilities in jobs they can perform. Most are at the low end of the wage scale, says Debbie Koch, HR manager for the Portland, Oregon-based firm.
As a result, many decline participation in the company’s health plan because they find the co-insurance charges unaffordable, but are eligible for publicly funded health plans. Nevertheless, a handful take advantage of DePaul’s voluntary short-term disability, dental and life insurance plans. While Koch regrets that so few are able to do so, she believes it’s important to put that opportunity in front of DePaul’s low-wage workforce.
Affordability isn’t the only determinant of employee utilization; the role of effective communication is critical. What works? The majority of survey respondents believe face-to-face meetings are “very effective” in getting the message across. A relatively high percentage also believe bundling voluntary benefit communication with distribution of materials for core benefits boosts enrollment.
What doesn’t work, many say, are mailings to employee homes. That’s because, in the words of one survey respondent, “We all know that employees don’t read them.”
But while employers endorse face-to-face meetings, many survey respondents also freely express concerns — evidently from experience — about approaches taken by some voluntary product brokers. Asked what would cause them to discontinue a relationship with a vendor, a common theme was aggressive salesmanship.
“Too pushy to sell products that our employees really don’t need,” commented one. “Showing up at my office without an appointment then telling me, ‘I don’t care about my employees if I don’t offer the coverage’” they are promoting, complained another. “Salespeople who are overbearing and become pests,” commented a third.
Sensing the possible risk that some brokers could turn their knowledge to an unfair advantage in a sales situation, W.K. Dickson’s Golynsky took the initiative 12 years ago to earn an agent’s license. “I thought it was important for me to be able to talk the talk and walk the walk with my brokers,” she says. “I want to make sure I am asking all the right questions for our employees,” she adds.
Holding vendors accountable
Golynsky also holds vendors to account with respect to their service quality — a highly-rated vendor selection criterion. Last year, she switched vendors for one voluntary benefit due to lack of responsiveness. “I expect them to get back to me faster than in one week,” she says.
“If I’m calling them, it’s probably because an employee has already contacted them with an issue,” and it hasn’t been resolved. She would have expected the vendor to address the issue directly with the employee, instead of having to jump in. “I am here to help, but I want employees to feel empowered to resolve their issues.”
Are worries about administrative hassles preventing any employers from offering voluntary benefits? When the 13% of survey-responding employers that don’t offer any voluntary benefits were asked for their reasons why, relatively few offered that rationale.
One employer — fittingly, in the advertising industry — expressed concern about “a perception of product endorsement by the company.”
Most comments, however, appeared to come from employers with highly generous budgets for employer-paid benefits. “Our benefit plans are very rich; therefore, we do not need voluntary benefits to supplement our current plans,” reported one employer. Another characterized voluntary benefits as a “poor substitute” for employer-paid ones.
But given the pattern of the benefits world’s evolution in recent years, voluntary product vendors have little to worry about from a macro perspective. Within the competitive voluntary benefit vendor sector, however, attention to cost competitiveness, service quality and placing employee communication above perceived aggressive sales tactics will, in theory at least, determine who comes out on top. And as this year’s survey suggests, employer willingness to put voluntary benefits on their menus that aren’t going to garner large enrollment numbers, small niche players that satisfy demanding employers’ quality standards have a secure future.