The Great Resignation, which has impacted almost every industry, has been a call for employers to step up to keep employees engaged and satisfied. An important way to do that is to improve your benefits package. Benefits show workers that they’re valued and appreciated, leading to greater job satisfaction and engagement at work.
Start by offering supplemental benefits, perhaps paid by the employer, so employees get more coverage in the event of an accident or serious illness. This extra step of paying for the plans on the employer side is that it’s a relatively inexpensive way to set your company apart from other employers who don’t offer these supplemental perks.
This post will cover eight ways to strengthen your benefits program.
8 Ways to Build a Better Voluntary Benefits Program
Employees continue to quit their jobs in record numbers, a trend now known as the Great Resignation. In 2021, almost 48 million Americans left their positions. Employers have to come up with new ways to keep them engaged and on the payroll.
Supplemental or voluntary benefits coverage is a great place to start with enriching your benefits package. These benefits fall outside of health insurance coverage and can make all the difference if an employee gets into an accident or is diagnosed with a serious illness.
8 ways to improve your employee benefits program
with a focus on voluntary (supplemental) benefits:
1. Stand out with employer-paid supplemental benefits
One way to focus more on retention is to offer employer-paid Accident, Critical Illness, and/or Hospital Indemnity coverage as a supplement to your employees’ regular health insurance plans.
These policies kick in when a qualifying event happens to the employee. Funds are sent directly to workers after the event, and they can usually use the money for any related costs. They often provide a better cost-to-benefit ratio than non-health insurance coverage like vision and dental, and these benefits kick in when your employees need help the most.
Most employers that offer these supplemental benefits have employees pay for their own coverage, but that’s why employer-paid benefits help you stand out in today’s competitive market for talent. Show employees that you value their health and well-being by covering the costs for them.
By covering these plans as the employer, you ensure that 100% of your employees have coverage, rather than just the 20% to 30% or so who would sign up for the plans on their own. The cost of offering these benefits is still relatively inexpensive for you as the employer, and it’s a tremendous safety net for your employees.
2. Make sure you have the benefits transparency you’re entitled to
It’s important to pay attention to what’s going on in the world of labor at the government level, as new laws are always being introduced and expectations change frequently. In the case of benefits, for example, new disclosure laws should be providing you with more transparency into exactly what your and your employees’ benefits investments are paying for.
The Consolidated Appropriations Act of 2021 (CAA) includes a requirement for benefits brokers to disclose all compensation over $1,000 to their employer clients. This provision was created because the benefits industry has had transparency issues for a long time. With this law, brokers now have to disclose what they earn, which is a win for employers.
Another change from the CAA is that insurance brokers have to provide an advance explanation of benefits (EOB) that informs participants about providers, costs, and other information. In addition, health network contracts that keep participants from accessing information about cost and quality of care, also known as gag clauses, are now banned.
Transparency empowers you to make the best financial decisions for your employees. When you know what their premiums are really paying for – like how much is going to pay claims for your employees vs. commissions and profits – you can make sure the benefits you offer deliver real value for your employees.
3. Emphasize that voluntary coverage can help with pandemic expenses
The global pandemic is still on the minds of many, and lots of employees have had to deal with high medical costs over the last two years because of the virus. It’s important that workers know how voluntary benefits coverage can help with these costs.
Critical illness coverage that includes infectious diseases can pay for medical expenses related to COVID-19, and hospital indemnity coverage gives your employees a lump sum when they’re admitted to the hospital. They can also receive per-diem payments to help with related expenses. It’s even possible that employees who contract COVID-19 can receive payouts from both critical illness and hospital indemnity plans if they have both and are admitted to the hospital.
Unfortunately, many of your employees may not know that this type of coverage is available during the pandemic. Some may even have the right coverages but not realize they can submit a claim for COVID. Communication is key, and as the employer, it’s important to research your coverage under these policies and make sure your employees know exactly how they can use the benefits you’re providing.
4. Avoid high voluntary benefits commissions
Voluntary benefits were created decades ago to help people get coverage who couldn’t afford health insurance. Salespeople had to travel around to sell the plans face-to-face and everything was conducted using lots of paperwork. It was an expensive process, and the result was the heaped, or high-low, commission structure.
Heaped commissions are still around for today’s voluntary benefits brokers. They could receive as much as 75% the first year, and then 5% to 15% each year after that. But in high-turnover industries, the heaped comp goes on and on with each new replacement hire. This structure incentivizes brokers to continue to get their clients to change plans so they keep getting that initial high commission on the total group. However, that can be disruptive for you and your employees while offering very little additional value to them.
This commission structure is inefficient and expensive, and it is part of why claims ratios for these lines of coverage can be so incredibly low. In today’s economy, 40% of Americans can’t afford to cover a $400 unexpected expense, while the average single deductible is $1,669. It’s important to maximize the claims dollars going to employees from these policies.
One solution is to prioritize transparency to ensure that you fully understand commission structures. Transparency continues to be a problem in the voluntary benefits world. The more that companies, brokers, and policymakers focus on being open, the more employers and employees will understand what they’re paying for. Working with a completely transparent company like BeneRe is a good place to start.
5. Say no to “free” benefits administration systems
You may be enticed by a benefits provider who offers you a “free” benefits administration system when you decide to work with them. But nothing is really free at the end of the day.
What a “free” benefits admin system really means is that your employees are paying for subpar technology in the form of higher premiums. Your provider likely isn’t disclosing all the hidden costs of these systems, and you lose control since you are now depending on the provider for your admin system. Depending on the license, they may have control of the data if you decide to switch your platform in the future.
“Free” benefits admin systems also may not work the way you need them to. Often, these are more inexpensive versions of better systems and could be out-of-date. They could be clunky for you and your employees to use, which will lead to dissatisfaction and confusion when people are trying to manage their benefits. That leads to more work for your HR department as employees keep coming to them with questions instead of using the self-service benefits admin system.
The answer is to find a better benefits admin system from an experienced vendor that will give you advanced features like automation, streamlined functionality, employee communication, and the ability to scale. Don’t be tempted or tricked when you hear “free” from a provider.
6. Encourage your employees to stop playing household budget roulette
Your employees may not know just how much financial protection they get when they have supplemental benefits coverage, but that safety net matters, especially now.
Americans are dealing with extremely high insurance deductibles and medical costs. When they’re faced with a serious diagnosis or suffer an accident, many aren’t able to cover their medical bills. This is even true for people who believe they have great health insurance – sometimes it just isn’t enough on its own.
Unfortunately, only 20% to 30% of employees sign up for voluntary benefits. That means up to 80% face higher financial risks if something happens. This is where household budget roulette comes into play – what are the chances of someone who actually has voluntary benefits getting into an accident or being diagnosed versus someone who doesn’t have that coverage? If 20% of your employees enroll in voluntary benefits and 20% have issues that would lead to claims on those benefits, you may only have a 4% overlap of the appropriate coverage. The more participation you have in the program, the more valuable and effective the program will be.
Emphasize to your employees just how much supplemental benefits can help them in an emergency. Better communication can go a long way, and you will start to see enrollment numbers increase. When more employees have coverage, the chances go down that someone without coverage will be the one hit with a serious event.
7. Use a provider that facilitates claims integration
You can significantly increase voluntary benefits utilization with claims integration. Claims integration is when employees are notified that they’re eligible to make a claim because their information can be cross-referenced.
For example, your insurance provider could have access to the medical claims a worker made, and then alert that employee that they can file a voluntary benefits claim related to those incidents.
Voluntary benefits typically have low claims ratios because employees have to know they are eligible and initiate claims on their own. But, 67% of employers now want carriers that support claims integration, so the trend is hopefully changing. Challenges that are still in the way are privacy laws that may restrict information sharing as well as a lack of incentive for insurance carriers to increase claims ratios.
Claims integration could make all the difference in increasing voluntary benefits utilization, ensuring that the plans are more valuable for you and your employees. Because the group captive model removes the carrier profit motivation, BeneRe’s model is well-aligned with this claims-inducing structure.
8. Take advantage of group captive “bowl of Skittles” distributions
Going with a group captive model is another step that will benefit both you and your employees. This model is based on a pool of employers, and workers within those employers receive a fully insured program through a top insurance carrier. However, a program like BeneRe goes a step further and reinsures the policies of the entire pool of employers, then redistributes the proceeds to those participants on an aggregate basis.
Think of group captive insurance as a bowl of Skittles, where each group that’s part of the plan has all of its employees included. Each group is a different color, but all the dollars that are contributed are in one giant pool together. The colors get mixed up, creating that bowl of Skittles, and claims for voluntary benefits are paid out of that multi-colored pool.
A program like BeneRe then ensures that dividends are distributed to participating employee benefits plans. Here it becomes a rainbow that is redistributed to the participants in funds that can be used for their health and wellness programs. The funds can only be used for health and wellness, and because the dividends are the result of the entire pool, individual employers don’t have any incentive to minimize claims for their own employees.
For any HR executive looking for a way to give their employees more for the resources they’re investing, BeneRe’s bowl of Skittles may be the answer to finding those funds.
Go with BeneRe
for a better benefits program
BeneRe believes in transparency for employers and the benefits industry at large. We make voluntary benefits clearer and ensure that you are getting the most value possible out of your plan – for your employees, not the insurance industry.
BeneRe is a group captive insurance program, and we won’t proceed with you unless employees will be getting better benefits at a better price. We believe in full transparency, and you can closely track the plan’s performance with quarterly reports. All underwriting gains go back to the employer plan for reinvestment in benefits programs.
Learn more by contacting our team today, or reach out for a complimentary financial analysis of in-force programs.