The Reinvention of Voluntary Benefits

Voluntary benefits are often a low priority at many companies, understandably so. Overstretched human resources professionals are so busy keeping up with their organization’s medical, pharmacy, and other employer-paid benefits that they have less time to focus on voluntary insurance programs.

Time pressures aside, it’s time to take another look at voluntary benefits. Many of today’s programs offer better value and can provide additional financial security for members, especially those with high-deductible health plans. And while “voluntary benefits” might include everything from pet insurance to legal services, in this instance we are talking about three of the most popular policies that offer cash payments when members have certain conditions (critical illness policies), are hospitalized (hospital indemnity), or suffer an injury (accident).

Historically, we should note that we often saw low plan utilization due to limited plan benefits and complex claims submission processes. But in the past few years, voluntary benefits programs have gotten a lot better. They cover more situations that members face. Claims are easier and sometimes automatic. And the price has often come down even as payouts increased. That’s unquestionably better value.

Not surprisingly, we find that employee satisfaction with these improved plans is high, and participation increases as people tell their coworkers about their experiences.

Here are the three main ways the policies have been improved:

Expanded benefits

Many carriers have expanded the situations in which the policies make payments. For example, some critical illness policies now offer coverage beyond the traditional conditions (cancer, heart attack, stroke, etc.), adding payouts for members who need treatment for infertility or certain behavioral conditions like PTSD.

In addition, carriers have relaxed some of the restrictive language that limited when these policies would pay out. For example, traditional critical illness plans only cover “major” strokes. Newer policies also provide payments, at a lower level, for minor strokes. Similarly, they offer payments for heart conditions beyond a full heart attack. Some hospital indemnity plans cover inpatient mental health treatments that were previously excluded.

Automatic claim generation

Perhaps the biggest change in voluntary benefits has been efforts by carriers to streamline the claim process so that members receive all the benefits they qualify for. Often, in fact, claims can now be generated automatically based on information captured by employer-sponsored medical and disability plans. Sometimes, when more information is needed, members are sent a partially filled-out claim form to complete or are reminded to call or go on the carrier website or app to complete the process.

For example, as soon as a member’s medical insurance pays a claim for an overnight hospital stay, it may trigger a second claim to be submitted to the hospital indemnity plan. The impact of this tweak is significant. One carrier reported that plans with automatic claims integration pay 272% more claims than those without.

Auto claims payments, reminders to file claims and intuitive claim payments (payment for all benefits associated at once) are all helping to support the increase in awareness of the policies.

Improved deal terms

You might expect recent changes to voluntary benefits programs to raise premiums. After all, expanding benefits and increasing the number of claims raises carrier costs.

In reality, today’s market for voluntary policies is very competitive, and employers can often replace existing programs with plans that offer significantly better benefits at a lower cost.

To get the best deal, it helps to consult a broker with deep industry relationships and sophisticated data analytics capabilities. At Alliant, for example, our underwriting team can analyze the performance of an employer’s existing voluntary policy to understand the carrier’s premium revenue and claim expenses. This information gives us the knowledge to better understand what policy premiums are appropriate. Indeed, we’ve seen cases where we’ve been able to replace a policy with one that had double the loss ratio — that is, twice as much of the members’ premiums get returned in claims.

A broker can also relieve much of the burden on the human resources team and still develop a menu of voluntary benefits that offer employees the financial security and value they deserve.

Ensuring success

It's crucial to effectively communicate voluntary benefit offerings, even after the initial enrollment period, to encourage ongoing engagement and high utilization. But it doesn't stop there. Measuring the success of these programs is vital. You want to ensure that employees who opt in are seeing tangible benefits that bring a positive return on their investment. When done right, voluntary benefits can be a true game-changer, providing employees with valuable options while boosting overall satisfaction and well-being in the workplace.

Additional Resources

Alliant’s dedicated team of Voluntary Benefits consultants continually evaluates the market and works with our carrier partners to bring employers the best products and newest enhancements in voluntary programs. Our specialized expertise and support ensure simplified administration and ease of integration into your existing benefits strategy.