Voluntary enrollment rates boosted with better data

Maximizing voluntary enrollment is much more than communication blitzes and the latest fancy enrollment technology. It’s about thoughtfully assembling a menu of benefit choices that reflect the unique characteristics of the employee population and the composition of your core benefit offerings, then making data-driven adjustments with each new enrollment cycle.

For surprisingly many employers, there comes an “aha moment” when voluntary benefits are aligned with employee needs, and enrollment results come in strong. Jim O’Connor, president of CBIZ Employee Benefit Services, says he has witnessed that moment of revelation many times. It occurs most often, however, when employers with a ho-hum view of voluntary benefits began with low expectations.

Many employers start out simply by making a broad array of voluntary benefits available “for [their] own sake,” he says, with little thought invested in the process. Sometimes they get lucky and find that a particular offering resonates with employees, prompting them to begin to put more thought into their voluntary strategy.

Also see: Education could boost disability insurance take-up

And developing a clear strategy is key. For example, suppose an employer wants to encourage employees to choose a high deductible health plan from its core benefits menu, but isn’t yet prepared to make it the only plan choice. Leveraging the voluntary plan to make back-up financial protection could render the high-deductible plan more palatable to employees, notes Barbara Gniewek, the leader of PricewaterhouseCoopers’ health care consulting practice in New York. The same principle holds true when an employer moves the entire employee population to the high-deductible plan model, she adds.

Voluntary accident, critical illness and disability policies can be combined under the umbrella of “protecting employees and their families in the event of a serious health problem,” O’Connor says.

Logic aside, what do employees really want? Naturally, finding the answer before the voluntary menu is assembled improves program performance. Rather than just look at broad statistics to project how your own employee population would respond to particular program offerings, it’s best to ask them directly, says O’Connor, who recommends using focus groups to gauge employee interest in various voluntary benefits. The limitation of surveys, he says, is that their validity pre-supposes employees already have a sufficient understanding of how various categories of voluntary benefits actually work, in order to make an accurate prediction of what they really want and would pay for.

Probing questions

In a focus group setting, a trained discussion leader can explore how representative employee groups feel about certain benefits, and the reasons why. Suppose, for example, that employees in a focus group show little interest in long-term disability insurance. The focus group leader could then gauge the group’s understanding of its purpose, the probability of their experiencing an injury or illness that would prevent them from working for an extended period of time, and how they would replace that lost income.

Also see: Top reasons employees use disability coverage

Once given an opportunity to consider such matters, employees’ expectations of whether they would buy voluntary short-term disability or long-term disability might change, leading to a more accurate prediction of how well an LTD offering would be received.

This scenario assumes, however, that when the voluntary enrollment period rolls around, all employees would be given the same opportunity to gain a deeper understanding of disability income products. But if the focus group session highlights the fact that relatively few employees understand DI policies’ purpose and their potential need for it, overcoming that lack of awareness should become an important communication priority in the run-up to open enrollment.

Also, since DI coverage is a staple of many voluntary offerings almost by default, focus group sessions can drill deeper into what employees would be willing to pay for coverage. That knowledge, in turn, can be used to shape the specific policy design options that should be made available.

Data-driven

For Tom Gilligan, vice president of U.S. distribution operations for Sun Life Financial, it’s almost impossible to have too much data to run a successful voluntary program.

Sun Life’s analytical approach begins with a detailed review of employee census data, correlating it to industry benchmarks taken from Sun Life’s customer base, as well as industry reports. Employee census data is segmented by demographic variables, or “benefit profile data attributes,” as Sun Life calls them — age, gender, income, industry, region, participation and incidence rates.

That shows, among other things, how benchmark utilization data for each of various employee demographic categories lines up with your employee population.

It could highlight, for example, high region-wide utilization of a particular voluntary benefit (e.g., STD) for a particular demographic segment (e.g., women in the 30-39 age bracket), and match it up with the proportion of your employee population that falls within that demographic segment. If STD happens to be highly utilized by that population in your region, yet you have paid little attention your own voluntary STD offering, a red flag should pop up.

Also see: Nearly 9 in 10 would buy DI if employer contributed

The database also allows employers to compare the basic features of their offering for that category of benefit, with those used by their peers. For example, if the STD product offers only one elimination period, but a more typical design is to offer several elimination period options, a plan sponsor might conclude that their enrollment rate would be higher if they expanded those options.

But such a decision could only be made in light of looking at your current, demographically segmented enrollment data. Doing so might highlight more significant deviations from the norm in other benefit areas. Given finite resources, this analysis can help employers prioritize both which benefits need to be adjusted, and which require the greatest communication effort.

Finally, after all of this data has been collected, analyzed and reflected in an updated voluntary product selection and communication strategy, employers will have a strong reference point for assessing the ultimate results: enrollment patterns.

Demographic variance

This is when the serious conversations get started, in Gilligan’s experience. “Voluntary group term [life insurance] has been common for decades,” he says. “Many people think anything above a 25% participation rate is good,” he adds. Yet looking more closely at the data often reveals substantial variance in uptake based on age and income.

Suppose, for example, the data shows that younger employees, who tend to have lower incomes, aren’t buying the coverage. Suppose further that many of them have families. Arguably, they have the greatest need for life insurance. That, Gilligan says, gives rise to a benefits strategy discussion of “is this a problem for us, and if so, what are we going to do about it?”

Such a discussion could lead to a decision to move group term life into the employer-paid side of the benefits mix. Or perhaps to seek ways to make more affordable life insurance coverage available through adjusting policy terms and the spectrum of available death benefit options.

On the principle that doing the same thing twice and expecting different results is foolhardy, many other voluntary benefit plan changes can be tested to change the subsequent year’s outcomes.

Also see: The voluntary enrollment process must change, LIMRA data show

One common culprit behind disappointingly low (based on benchmark data) enrollment rates, Gilligan says, an overly ambitions roster of offerings. Putting every imaginable voluntary product in front of employees — even if some have expressed interest in a particular one — often causes paralysis.

PwC’s Gniewek urges employers to make sure that only what she calls “real” products are included on the menu. That means benefits that, in the employer’s judgment, offer more substance than trendiness.

Also, the more widely employees’ voluntary dollars are spread, inevitably the lower the enrollment level in each product. That means the suppliers of those products will not be able to price them as competitively as they otherwise would have, Gilligan cautions.

If the benefits menu has been pared down to a selection that won’t overwhelm employees (or always has been modest), adding new offerings should be limited to two or three, he suggests. Also, simply throwing it all out there, even with good explanatory resources to help employees understand how each offering operates, can be a disservice to employees. “You’ve got to prioritize the menu for them,” Gilligan maintains.

Also see: 5 voluntary products see double-digit sales increases

But today, all of this usually can be accomplished effectively online. Face-to-face worksite enrollment sessions, once considered the gold standard, are generally no longer held in such high regard. That’s the consequence both of the high quality of many or most online enrollment systems, with their education and modeling tools, and a dawning change in employee attitudes.

“We’ve become comfortable with the Amazon buying experience,” says O’Connor. While white-collar workers were originally assumed to be the only ones content to enroll online, “today it’s the same for the employees working in retail on the shop floor,” he adds.

And it’s not merely a question of available technology. “Most people are just too busy at work and don’t want to take the time until they’re at home,” says Gniewek.

Richard Stolz is a freelance writer based in Rockville, Maryland.