Reaching Beyond Open Enrollment

How the health care landscape can help you better serve your clients

by Tye Elliott

Four years ago, new health care legislation caused a shift in the benefits landscape, creating unique dynamics and challenges for employers as it progressed. Today, most of the benefits decisions have been made by your clients in order to adapt to the evolving health care landscape. However, in the coming months, advisors need to go beyond the usual open enrollment basics and work with clients to examine the implications of these decisions on benefits and workforce strategies. Below are issues and opportunities to review with your customers to ensure their benefits and rewards programs continue to drive talent recruitment, retention, productivity, and ultimately competitive advantage.

Controlling costs continues to be priority No. 1

The 2014 Aflac WorkForces Report, a study examining employer and employee benefits trends and attitudes, reveals that for four consecutive years employers have named controlling health and/or medical costs as their top business concern. The study shows that 49 percent identified it as their primary objective in 2013 and took significant steps to contain costs, which included:

• 32 percent eliminated or delayed raises
• 22 percent eliminated or reduced employee benefits
• 9 percent eliminated contributions for family coverage
• 21 percent changed some full-time workers to part-time workers
• 14 percent reduced the number of major medical plan options

What does this mean for advisors? Advisors can position themselves as a trusted counselor. Of the employers surveyed, 45 percent say they will rely on brokers or insurance companies to suggest changes to their benefits packages due to the changing health care environment. Advisors should point out to clients that cutting or trimming back on health care benefits may be a tightrope that could become trickier to walk. As the job market continues to recover, employees may decide to seek out companies with more competitive benefits offerings.

Cost shifting to workers compounds an already slippery slope

The Aflac study finds more than half of companies increased employees’ copayments and/or shares of premiums last year and 59 percent plan to do the same before the end of 2014. Employers also moved away from traditional major medical insurance in 2013 and instead paired health savings accounts (HSAs) with high-deductible health plans (HDHPs). And, these trends show no signs of slowing down and employers will continue to focus on coupling ongoing business growth with lowered costs.

Employees are well aware of companies’ efforts to pass health care costs on to them and they expect this trend to continue. The majority of workers, 86 percent, at least somewhat agree the medical costs they’re responsible for will increase and 41 percent say maintaining their health care benefits are the most important issue to them.

But on the flip side, the 2014 Aflac study states that 68 percent of workers at least somewhat agree that they regularly underestimate the total cost of an injury or illness, including medical, household and out-of-pocket expenses. The increased financial burden resulting from changes to workplace benefits plans often magnifies this already fragile financial position of many employees. According to the Aflac study, nearly half (49 percent) of employees have less than $1,000 to pay for unexpected out-of-pocket medical expenses and 53 percent would need to borrow from a 401(k) and/or use a credit card to cover unexpected medical costs.

These employees are one serious medical event away from financial hardship and they aren’t leaving concerns about money at home. A majority of workers name “personal financial issues” the number one non-work-related issue distracting them while on the clock. The most successful companies today and in the future will strike the right balance between profits and principle – recognizing there is a tangible relationship between the well-being of its workforce and enduring profitability. Advisors should help employers choose smart benefits based on what best meets the needs of their employees.

Diversify and prosper

In today’s world, a robust benefits offering no longer consists of solely major medical, life and dental insurance. However, increasing health care benefits options does not mean that employers have to be at a disadvantage for the sake of employees, or the other way around. In other words, a comprehensive benefits offering that includes voluntary insurance can help both employees and employers.

For employers, the best part of providing a wide range of benefits options means satisfied and loyal employees. As health care costs continue to rise, employees are faced with examining their benefits package to ensure there are safety nets in place to protect their income and assets. In fact, 85 percent of workers agree their company’s benefits package is at least somewhat influential on job satisfaction and 83 percent say it affects company loyalty.

Offering additional options like voluntary insurance shows that employers understand their workers’ evolving needs and also helps create a productive and loyal work environment. Since voluntary plans like accident, disability, critical illness or hospital complement major medical insurance coverage, they serve as an extra layer of protection to help employees with their financial security.

Designed to help pay for out-of-pocket expenses, cash benefits can be used to help pay copayments, deductibles or any other health-related cost that isn’t covered by major medical insurance. It can even be used to pay living expenses such as a mortgage or car payment, utility bills, education costs or credit card bills.

And the advantages of voluntary policies are not lost on employees, 63 percent of workers see a growing need for voluntary benefits options in 2014 compared to previous years.
When advising clients, emphasize what makes voluntary insurance policies stand out. Not only are most policies available at no additional cost to employers, they help provide employees with a range of coverage they need and want. Advisors can drive this message home by reminding employers that smart companies understand controlling costs as well as encouraging employee job satisfaction and engagement are important to their business sustainability.

The role of an advisor

Advisors serve as a resource for their clients, helping to guide them toward the best benefits options for their particular needs. Balancing client situations with the financial state of employees can sometimes make an advisor’s job difficult, especially today when the two are often conflicting. When counseling clients, suggesting a variety of benefits options can help fulfill a client’s need to control costs while also meeting the needs of their employees.