Benefits Column Your Approach to Voluntary Benefits

It appears employers have moved in droves to include voluntary product offerings as part of their overall employee-benefits strategies. Here are a few things to consider as you evaluate the many and varied options out there.

Monday, July 28, 2014
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It seems almost every time I reflect on ways human resource executives approach and administer employee benefits, I tap into my first full-time employment experience. I've written about my employer before. And I appreciate, now more than ever, the foresight the HR leader exhibited.

While I enjoyed a rich benefits package, the one program missing was a long-term-disability plan. I worked in New Jersey so I had some short-term coverage under the statutory plan. That benefit didn't come close to approximating my salary. My employer, however, offered an extended paid-time-off bank (accrued at the rate of 0.6 hours each week) that supplemented the state's payout for temporary disability.

My employer included one voluntary option in the benefits portfolio -- an LTD policy with a low, locked-in premium and generous plan provisions, including an "own-job" definition of disability. I still carry that policy today.

Twenty years later, the availability of voluntary benefits has grown from an anomaly to a strategy for the majority of employers. According to Gil Lowerre, president of Avon, Conn.-based Eastbridge Consulting Group Inc., 54 percent of all employers provided at least one voluntary benefit in 2006. Six years later, that percentage has grown to 77 percent.

It's important to clarify the definition of a voluntary product since not everyone, nor every company, defines it in the same way. For Eastbridge, the definition only includes life and health benefits whereby the employee pays 100 percent of the premiums through payroll deduction and there is no direct contribution by the employer. In the 25 years Eastbridge has followed voluntary benefits trends, life and disability insurance remain the first and second most popular products.

My colleague and friend, AIG's Vice President of Voluntary Benefits and Business Development Mike Zarrillo, however, believes an employer's voluntary benefits strategy can go beyond the Eastbridge classification.

Zarrillo sees two other categories gaining in popularity in the workplace: value-added benefits such as legal services and pet, home and auto insurance; and "beyond-value-added benefits" that play on the concept of consumerism at work. He's watched some companies give employees access to home-protection products and even home appliance purchases that the employee buys via payroll deduction.

If employers and benefits-industry leaders alike are interested in workforce engagement, say Zarillo, then they need to remember the employee is the buyer. He suggests we must make an emotional connection with employees if we are going to be successful in getting them to think differently about benefits.

"What keeps me up at night," says Zarrillo, "is how do we get people to think about buying benefits in the same way they think about buying a [television]?"

Bill Dalicandro, vice president of consumer solutions at Unum, says the insurer is borrowing pages from behavioral-science textbooks to engage more working Americans in voluntary product offerings. For instance, Unum's benefits team schedules time to meet with employees, instead of waiting for workers to schedule appointments to discuss their benefits. Dalicandro believes this removes the "hassle factor" of workers having to make the time to schedule something.

Other workforce-engagement tricks include removing "insurance speak" from product descriptions and changing how consumers think about benefits such as life and disability insurance.

In Dalicandro's experience, no one likes to think of himself or herself in terms of dying or becoming disabled. Products are positioned with a focus on perks that come attached to insurance products, including health and wellness benefits.

So why should HR executives either include or expand the number of voluntary products in their overall benefits strategy? Essentially, every expert will tell you that the type of benefits provided by companies help attract and retain employees.

MetLife's recently released annual U.S. employee benefits trend study indicates 75 percent of workers who are very satisfied with their benefits are also very satisfied with their jobs, compared with 30 percent of employees who are not very satisfied with their benefits yet still like their work. (Keep in mind the relationship between these variables may simply be an association and not necessarily cause and effect.)

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What is more interesting to me from a strategy perspective is that voluntary products allow HR leaders to offer benefits that meet the wants of a niche group of employees. And evidently, there can also be a coolness factor associated with voluntary offerings.

When I interviewed Melissa Yoakam, Chipotle Mexican Grill Inc.'s benefits manager, about the company's extensive number of voluntary benefits, she summarized her company's strategy this way: "Chipotle is adamant that it will offer employees unique, edgy benefits." And providing voluntary worksite products allow the company to meet its goal.

If you're intrigued to do more with voluntary benefits, the experts universally offer these two pieces of advice:

*     Look for benefits advisers with voluntary product experience. There has been a mass migration of employee benefits brokers to voluntary benefits. Many are novices in this product offering and may either rely on a small number of carriers to help them position the products or may simply "spreadsheet" as many as 15 insurance carriers with an eye only on cost.

*     Be careful how you look at participation data. Most insurance carriers will talk about employee penetration rates when it comes to the uptake of voluntary benefits. Lowerre cautions that two variables are important when considering participation data: how the enrollment occurred and the type of product being offered. In some cases, using an online platform will provide great results. Other times, mandatory group meetings followed up with one-on-one appointments is the direction to follow. There is no clear answer. That's why working with an experienced broker and carrier is so important.

Carol Harnett is a widely respected consultant, speaker, writer and trendspotter in the fields of employee benefits, health and productivity management, health and performance innovation, and value-based health. Follow her on Twitter via @carolharnett and on her video blog, The Work.Love.Play.Daily.

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