Beware of Benefits Tunnel Vision

Don’t let all the focus on health insurance keep your clients from paying attention to the big benefits picture

by Rich Williams

Without a doubt, the Affordable Care Act was one of the biggest newsmakers of 2013. The law was on the lips of every news anchor and top of mind for every broker and employer all year long.
With so much attention focused on medical plans these days, it’s easy to forget about all the other coverage that makes an employee benefits program so important. As insurance professionals, we don’t want to overlook the forest for the trees. We need to keep a broad benefits perspective to help our clients remain competitive.

Health care reform has consumers worried

For three years, employers and benefits advisors have been trying to get a grip on the Affordable Care Act and what it all means. Although details are becoming clearer, much uncertainty remains. One of the biggest concerns for consumers is the current price of health care insurance. With medical care and health insurance premiums becoming increasingly expensive, people worry about their ability to pay for health coverage.

A recent Colonial Life survey bears this out. In a poll of more than 1,000 employees (full-time and/or part-time)1, 83 percent say they are at least somewhat concerned about their ability to pay for health insurance premiums. Eighty-two percent are concerned about expenses no longer covered by their health insurance plan and the addition of, or possible increases in, their co-payments and deductibles. And 81 percent express concern about unexpected medical expenses such as emergency room visits and major surgery.

Employees are also uncertain about the impact the Affordable Care Act will have on them and their families. Nearly half of workers surveyed say they are not very knowledgeable or not at all knowledgeable about the law and its potential personal impact.2

Your clients are uncertain too

Employees aren’t the only ones with questions. The new health care legislation has both large and small businesses considering their options regarding major medical insurance. For instance, small businesses with fewer than 50 employees might be considering whether to continue offering health insurance benefits.  And large employers might be reconsidering whether or not to offer their rich benefits packages in light of the excise tax of 2018. But whatever changes employers may make, the vast majority of them plan to keep offering core health benefits, it appears.

A 2013 survey by the Kaiser Family Foundation shows 91 percent of companies with 50 or more workers offer medical coverage, a number statistically unchanged from 2012.3 And 99 percent of large firms with 200 or more employers offer health insurance to their workers today, up from 98 percent in 2012.

So rather than get overly focused on medical insurance, make sure your clients look more broadly at ways to control costs and improve their benefits education to stay competitive. And make sure they’re taking advantage of voluntary benefits, which are more timely than ever.

Small employers need to stand out from the crowd

Small businesses understand the need to be competitive. The lifeblood of America, small employers work hard every day to keep their doors open. A good employee benefits package can help small employers attract and retain good employees, and can be a differentiator that helps them stand apart from crowd.

When small employers offer voluntary benefits, they give their employees real value and choice. From disability and life insurance to accident and critical illness coverage, voluntary benefits can help expand and enhance an otherwise basic benefits plan. Employees can purchase voluntary benefits at work for less than they could buy them on their own, and they offer the convenience of payroll deduction. Voluntary benefits also help employees fill in any gaps in coverage such deductibles, co-pays and out-of-pocket expenses that aren’t covered by their medical plans. And your clients will like them because they expand their benefits program without any additional cost.

Large employers are starting to make changes

The Affordable Care Act is prompting large employers to make changes that will help them take advantage of the post-ACA landscape and mitigate potential threats. Some will test the waters in private insurance exchanges with their retiree population. And many are making changes to their traditionally rich benefits plans to avoid the 2018 excise tax on “Cadillac” health plans. One such change involves enrolling employees in account-based health plans (where employers pair tax-advantaged accounts such as health spending accounts and flexible spending accounts with high-deductible health plans). Sixty-six percent of large companies have these plans in place now, and another 13 percent say they will add one in 2014.4

When large employers add voluntary benefits, they can temper disruptive change and reduce the cost impact of higher deductibles on employees. Accident coverage, hospital indemnity insurance and critical illness coverage can be offered as voluntary choices. By introducing these supplemental benefits as a range of new benefits choices, employers can turn a potentially unpopular change to their advantage.
Benefits communication is important to all employers.

No matter what size client you serve, benefits communication will be more important than ever in the future. Health care reform has shaken up the benefits world as we know it and has created a lot of questions for everyone involved. The responsibility for purchasing health insurance and making benefits choices is shifting more and more toward employees. Your clients—and their workers—need help making decisions. So it’s critical not to skimp on benefits education.

Although many small employers may be offering employee benefits for the first time, they should understand the strengths and weaknesses of various enrollment methods. The online enrollment for purchasing health insurance through the marketplaces may not be best for all benefits.  For example, employees prefer speaking face-to-face with someone when enrolling in their voluntary benefits. According to a study by Eastbridge Consulting Group, most employees (65 percent) say a one-to-one meeting with a benefits representative is the most helpful communication method to introduce them to voluntary benefits at work.5 Fortunately, top voluntary benefits providers offer individual benefits education as a part of their enrollment services at no cost.

Large employers should also look closely at their benefits communication efforts. Paying extra attention to the communication of any changes in the employee benefits package, along with proper education about the existing benefits, will pay dividends in employee satisfaction and loyalty. Employees who understand their employer’s benefits investment are simply more likely to be satisfied with their workplace. A 2011 study found that more than four out of five workers who rated their employee benefits education highly also rated their benefits packages positively and said their workplace was an excellent or very good place to work.6 And the cost of educating employees shouldn’t be a barrier. Working with benefits vendors that provide complimentary benefits education as part of their services can help large employers keep their budgets in line.

Keep your eye on the big picture

Health insurance remains the cornerstone of a good benefits package. But don’t let the heightened attention on health coverage cause you to take your eye off the rest of your clients’ benefits program. And don’t overlook the important role voluntary benefits can play in the new benefits landscape.
Endnotes
1. Online survey conducted within the United States for Colonial Life & Accident Insurance Company by Harris Interactive, Sept. 3-5, 2013, among 2,046 U.S. adults age 18 and older, among whom 1,023 are employed full-time or part-time.
2. Ibid.
3. Kaiser Family Foundation Employer Health Benefits Survey, 2013.
4. “2013 Health Care Changes Ahead Survey,” Towers Watson.  2013.
5. “Worksite MarketVision—The Employee Viewpoint,” Eastbridge Consulting Group, Sept., 2013.
6. Unum, Employee Education and Satisfaction Survey, 2011.