ACA, Millennials & the New Benefits Strategies

Educating clients on the need for a sound enrollment strategy

by Alison Daily

Ms. Daily is second vice president of clinical and vocational services with Standard Insurance Company, Portland OR. Connect with her by e-mail: [email protected]

 

The employee benefits landscape has undergone a major overhaul in the last year. Brokers have had to keep up with changing regulations around the Patient Protection and Affordable Care Act (PPACA) to help support clients through the implementation process. Now that the dust has settled, a new problem has arisen.

Many brokers who have primarily focused on medical insurance sales may have to find a new revenue stream due to clients entering the exchanges. For those looking for new income options, considering other ancillary benefits – including disability insurance – can help boost your sales and perhaps open the door to a new client base.

May is Disability Insurance Awareness Month in the benefits world, a month traditionally focused around education on the need for income protection. Whether you are currently selling disability coverage, or are interested in adding it to your benefits portfolio, consider elevating the disability protection conversation with your clients this month to talk about protecting their bottom line.
Connecting with your clients about how disability benefits can work in their favor – especially with your clients that are offering disability benefits on a voluntary basis – can make you a trusted partner, and help cultivate a long-term relationship.

Why your clients need disability protection

Your clients are concerned about costs, and health care can be one of the biggest factors affecting their overall bottom line. To help reduce costs, some employers are considering offering benefits, primarily non-medical benefits such as long-term disability (LTD) insurance, to employees on a voluntary basis. This sounds like the best of both worlds: Employees have disability protection with little to no cost to the employer.

However, there’s one cost they may not be considering, which could alter the big picture of their decision: lost productivity as a result of an employee not selecting LTD coverage. Lost productivity can include such things as increased employee absenteeism and presenteeism and higher health care costs. Here’s why.

Without LTD coverage, employees can either apply for Social Security Disability Insurance or work through their injury or illness for as long as possible – potentially leading to a prolonged recovery or even exacerbating their condition, requiring additional care.
One study found that this scenario can cost employers as much as 6.1 percent of their payroll, which is nearly as much as private industry employers spend on health insurance.

Making the case to enroll

When selling voluntary benefits, brokers must underscore the importance of maximizing employee participation through a sound education and enrollment strategy. Offering the benefit isn’t enough for clients unless their employees take advantage of it. Plus, in the case of voluntary benefits, when you’re asking employees to help cover some — or all of — the costs, making sure they have a strong understanding of the benefit’s value is more critical than ever before.

In this outreach, it’s especially important to connect with younger employees about the need for coverage. Not only is money tight for the millennial generation, they’re also prone to underestimate their risk of going on a disability leave, when, in fact, they are especially vulnerable. Some estimates show that 1 in 4 of today’s 20-year-olds will become disabled before they retire.

Consider that, according to the Pew Research Center, households headed by adults younger than 35 had 68 percent less wealth than households of their same-aged counterparts in 1984. Because of this decrease in wealth, it’s reasonable to conclude that they’d unlikely have the savings needed to withstand interruption in their household income.

When selling voluntary benefits, brokers must underscore the importance of maximizing employee participation through a sound education and enrollment strategy. Offering the benefit isn’t enough for clients unless their employees take advantage of it

What’s more, millennials have more to protect than those who were in this age group 30 years ago. Recent data shows 38 percent of adults younger than 35 owned their own homes in 2009, compared to just 4 percent in 1984.

The Big Millennial Target

Incenting millennial enrollment will require employers to make an especially strong case and use new thinking. Successful benefits enrollment strategies will take advantage of the millennials’ proclivity for technology. It’s no secret that this generation demands instant information and pursues education and training, characteristics that open the door for benefits communications.

Focus on educating employees about:

  • What disability insurance protects
  • The realities of their risk of going on disability leave
  • How disability insurance helps if they should need to use it
  • The potential repercussions of taking a disability leave without a safety net

A strong online option will include information that is customizable to an organization’s specific benefit offering and can even help employees estimate needs and identify the type of coverage that’s best for them. Tools like this also reduce the burden on HR departments by providing a go-to resource for employee questions. The Council for Disability Awareness is another good source for helpful employee-focused tools, including online games to help educate on the need for coverage.

Online enrollment is another component of a successful millennial engagement strategy, and a logical step following Web-based education materials. This functionality helps employees easily elect to participate in a benefits program while simplifying plan administration and increasing accuracy from an HR perspective. With online enrollment, employees can easily keep their information up-to-date, including selecting new beneficiaries and making data changes related to major life events.

Take charge

The benefits from educating employers on disability insurance and encouraging enrollment are two-fold: The first is that employees’ incomes are protected if they experience a disabling illness or injury. The second is that employers can be safeguarded against decreased productivity and increased health care costs for employees who may experience a disabling condition.
Brokers are in a unique position to educate their clients on the benefits of offering voluntary disability coverage and ensuring a sound enrollment strategy. When carriers, brokers and employers partner to maximize enrollment, everyone benefits.

 

Endnotes
1 Kronos/Mercer. Survey on the Total Financial Impact of Employee Absences. 2010.
2 Bureau of Labor Statistics. News release. June 12. 2013. Available at: www.bls.gov. Accessed on February 27, 2014.
3 U.S. Social Security Administration. Fact Sheet. July 26, 2013. Available at: http://www.ssa.gov/pressoffice/basicfact.htm. Accessed on March 6, 2014.
4 Pew Research Center website. n.d. Available at: http://pewsocialtrends.org/2011/11/07the-rising-age-gap-in-economic-well-being/. Accessed on January 17, 2014.
5 Pew Research Center website. n.d. Available at: http://pewresearch.org/pubs/2124/age-gap-silent-generation-millennials-wealth-gap. Accessed on January 17, 2014.