According to a LIMRA report released late last summer, "Voluntary Worksite Benefits: Penetration and Market Potential," almost one-third of all employers are considering offering new voluntary benefits to replace existing benefits that are paid entirely or in part by the employer.
This would potentially affect between 19 million and 45 million employees over the next two years, LIMRA estimates.
Interest in voluntary is particularly high among large organizations (1,000 or more employees); half of these firms show interest in transitioning their existing benefits to voluntary.
Furthermore, the two benefits most likely to be shifted to voluntary are medical and prescription drug plans, the survey indicates, which could boost interest in discount programs (read more on these in the September issue of EBN's sister publication, Employee Benefit Adviser).
"Of those employers considering adding a voluntary major medical or prescription benefit, the study revealed that three of four may be adding the voluntary benefit to replace their existing medical or prescription benefits," LIMRA states.
"Currently 57% of U.S. employers offer voluntary benefits," said Ron Neyer, assistant research director at LIMRA. "Assuming that most employers that express a likelihood of adding a new voluntary benefit in the next two years follow through, this will provide a new employee-pay-all option to as many as 46 million employees."
The study confirmed that life and cancer insurance remain the most commonly offered voluntary benefits. More than 300,000 businesses offer each product type to their workforce.
Voluntary long-term and short-term disability insurance products are also very popular, with more than 20% of companies offering these benefits to their employees.
Vision and dental benefits topped the list of voluntary plans employers said they are most likely to add in the next two years.
A different view
The majority (86%) of respondents to a mid-year confidence index survey from Eastbridge Consulting believe that the industry's voluntary sales will increase over the next 12 months. This percentage was down only slightly from the 87% who believed this as of Dec. 2010.But "while the total percentage is about the same, the percentage thinking that sales will 'increase a lot' went down significantly," says Gil Lowerre, president of Eastbridge. "Because of this, the mean for this question decreased to 4.07, down from 4.16. This, taken with other dips in the key index measures, contributed to a dip in the overall index number to 98.4."
The "Voluntary Industry Confidence Index" study is conducted semi-annually and includes responses from individuals active in the market - carriers, brokers and vendors.
Fifty-three percent of respondents feel there will be a negative impact to sales of voluntary products because of the economy. That's up from just 33% as of Dec. 2010.
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