Substantial increases in healthcare costs in the past decade have forced employers to make critical decisions about the benefit packages they offer their employees. With many health plans facing double-digit rate increases nationwide, many companies and organizations have had to implement some combination of: absorbing the cost increases themselves, passing on the increase to the employee’s contribution, or decreasing the amount of level of benefits in their plan(s) to continue to keep it affordable for both parties.
Since benefits packages continue to be an increasingly important factor in the recruitment and retention of employees, employers now face the challenge of creating a robust, total benefits package that is attractive enough to employees, without completely sinking the finances of the employer. This ongoing challenge has been met by an increase in the offering of voluntary benefits; additional benefit policies available through the employer that carry nowhere near the same cost and contribution requirements that health insurance does but can be incredibly valuable to employees.
Voluntary benefits offer coverage towards expenses not covered by medical insurance. From more popular coverages like dental and vision insurance, to disability, critical illness and cancer insurance policies, many individuals find tremendous value in these kinds of policies being offered on a voluntary basis at the group level. Most of the time, benefits offered at a group level have discounted rates relative to individual products due to the volume of coverage that the carrier is obtaining. In addition, there are sometimes products that are available for companies or organizations that can’t be obtained individually. For example, an individual with a history of sickness or injury can sometimes find it difficult to be approved for an individual life insurance policy if they seek coverage on their own. However, group life/AD&D insurance policies that are employer-sponsored often have a “guaranteed issue” amount for groups with enough employees, which allows members to have a guaranteed death benefit amount on a life insurance policy without having to provide Evidence of Insurability or answer health questionnaires. For employees with complicated health histories, this policy being offered on a group level makes life insurance more accessible and easier to obtain than what is available to them individually.
Additionally, voluntary benefits can help supplement medical insurance for some of the higher-cost medical expenses that can occur. For example, there has recently been an increase in the number of groups offering hospital indemnity insurance, which is a policy that will reimburse a member for certain inpatient and outpatient expenses incurred throughout the year. When paired with a high-deductible medical plan, these policies allow members to protect against some the risk of high out-of-pocket cost hospital expenses. Pairing a hospital indemnity plan with a high-deductible health plan can often be a more cost-effective way of protecting against medical expenses than offering a benefits-rich, low-deductible medical plan.
The primary goal of offering voluntary benefits is to make coverage available to employees that will offer them protection in any area that they need. Many times, employees are not even aware of the various coverages that are out there in the market; but they rely on their employer to let them know the kind of insurance that is available to them. Policies like Group Cancer and Critical Illness, which an average person does not usually seek out on their own, can be a critical component of how one avoids huge financial losses if they get diagnosed with cancer or another serious illness.
Summit’s goal as a partner-adviser is to help employers make these benefits available at an affordable level, and to educate employees about which benefits make financial sense for them and their families. For employers in a competitive industry landscape, offering the full suite of voluntary benefits often proves to be a competitive advantage in recruiting and retaining the highest-quality employees, and shows prospective employees that the group or organization is actively engaged in the well-being of their workforce.
Executive Vice President- Voluntary Benefits
Executive Vice President- Voluntary Benefits
Clay Shemwell and Kevin Sumlin are not affiliated with Cetera Advisor Networks LLC.