Today’s Benefits Conversation

How to help employees prepare for the unexpected

by Meredith Ryan-Reid

Meredith Ryan-Reid is Senior Vice President, Accident & Health/Worksite Benefits, with MetLife. For more information on MetLife's Accident & Critical Illness Impact study, visit here.

Preparing for the unexpected is always difficult, but it helps to know what resources you have at hand. One valuable resource employees may not be taking full advantage of is their employee benefits.

By not exploring the full breadth of benefits available from their employers, employees may be leaving themselves vulnerable to financial gaps that could have a lasting financial and emotional impact.

This is especially true when it comes to supplemental coverages available through the workplace. Coverages like accident and critical illness insurance help fill financial gaps, but employees do not always understand what they are or how they work and often walk away from these coverages instead of benefiting from the significant assistance they can provide in the event of an emergency.

According to MetLife’s Accident and Critical Illness Impact Study, half of employees say the impact of an accident or illness is on their mind, yet half of those employees are unaware of the protection critical illness and accident insurance could provide. Eighty-five percent of employees are not aware of everything covered under accident insurance and eighty-three percent are unaware of what critical illness covers. However, when shown a clear definition of the products, seventy-five percent of employees surveyed find accident and critical illness insurance very appealing.

At the same time, employers are facing a rapidly evolving health care landscape and challenges when it comes to rising costs and the impact of health care reform. As a result, they are shifting more and more of the responsibility for the cost of benefits to their employees.

With a Cadillac tax to be levied on medical plans in the next few years, employers are looking toward more cost effective solutions, such as consumer-driven health plans, which allow individuals to pay for routine medical care. By offering supplemental health benefits such as accident and critical illness insurance to complement these new CDHPs, employers can offer employees simple and valuable solutions to fill in the coverage gaps.

The financial impact of accidents on employees

According to the Study, out-of-pocket costs associated with an unexpected health issue can be as high as $4,112 for an accident and $14,444 for a critical illness.

Even starker is the estimated lost income as a result of an accident or critical illness –this can be as much as $26,900 and $50,600 respectively. The cost and loss of income can cause significant financial stress on individuals and their families at a moment when they are already dealing with emotional and physical distress due to the accident and/or illness.

Add to that the reality that employees are generally financially unprepared to address unplanned medical costs, and the situation can be seen as even more stark. According to MetLife’s 13th annual Employee Benefit Trends Study (EBTS), 68% of employees report they are concerned about being able to meet their out-of-pocket medical costs. In addition, 44% of employees described themselves as living paycheck-to-paycheck and only 34% of employees have a savings cushion of three months’ salary.

With a Cadillac tax to be levied on medical plans in the next few years, employers are looking toward more cost effective solutions, such as consumer-driven health plans, which allow individuals to pay for routine medical care

Having appropriate coverage through solutions like accident and critical illness insurance, which provide lump sum distributions upon diagnosis of a covered illness or proof of accident helps relieve some of the additional stress caused by out-of-pocket costs including deductibles, co-pays, and non-medical expenses like travel, child care, and household help.

Benefits translate into employee job satisfaction and loyalty

While accident and critical illness coverage helps bridge financial gaps for employees, they also pay dividends for employers in job satisfaction, loyalty and productivity.

Employees that are satisfied with their benefits are three times more likely to say they are satisfied with their jobs and are loyal to their employer. In addition, they are much more likely to recommend their companies as great places to work.

MetLife’s EBTS revealed that 40% of employees say having a wide selection of benefits would make them feel more loyal to their employer and 66% of employees would recommend their company as a great place to work if offered a broad suite of 11 or more benefits. As it relates to accident and critical illness insurance specifically, nearly 6 out of 10 employees say they would feel positive about their employers if they offered these coverage options. However, just offering these benefits is not enough.

As mentioned above, employees are confused about what the coverage options entail and what they’re really getting when signing up for these supplemental insurance offerings. Communication and education are critical.

Education and communication are critical

Employers do not need to resort to scare tactics to drive employee interest in supplemental benefits – but they do need to remind employees of the potential risks they face.

By understanding that no one is immune to injury or illness, employees can make sure they’re making informed decisions during enrollment. With only 38% of employees selecting the correct definition of accident insurance in the MetLife Accident and Critical Illness IQ Study, it is evident that there is a need for greater education. Employees often confuse accident and critical illness insurance with traditional health coverage such as medical and disability insurance.

According to MetLife’s EBTS, more common benefits such as life, medical, dental and vision are generally understood; however, more uncommon benefits such as accident and critical illness insurance are not. In fact, only 30% of employees understand critical illness insurance and only 41% understand accident insurance.

Providing employees with a broad suite of voluntary benefits to suit their needs is important, but it’s only part of the equation. Providing them with clear explanations of what the benefits are, what they cover, and how the benefits offered complement each other to provide a cohesive safety net is equally critical. In MetLife’s EBTS, the main drivers of employee confidence and understanding in their benefits selections are that they are easy to understand (32% impact) and there is a clear explanation of how much employees would pay for specific services (22% impact).

As benefits consumers, employees must be armed with the knowledge to realistically estimate what kind of coverages they need in the event of an accident or illness. Armed with multiple options to choose from and clear communication and education from their employers, employees can gain peace of mind that they’ve done everything possible to protect themselves and their family. ♦