Voluntary Benefits eBook

Voluntary Benefits eBook | hubinternational.com/VoluntaryBenefits 1

Voluntary BenefitsWhy voluntary benefits are necessary benefits.

Learn how voluntary benefits can help you attract and retain top talent without adding cost.

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Let’s Add Value Without Adding Cost

Customized Employee Benefits 3

The Advantages of Voluntary Benefits for Employers 4

Cadillac Tax & Voluntary Benefits 5

Workers’ Comp & Voluntary Benefits 6

Voluntary Benefits: A Solution 7

Voluntary Benefits Offerings 10

The Benefit of Voluntary Benefits 12

Voluntary Benefits eBook



Your employees are your most valuable assets. And probably your largest expense.

Rising health care costs, health care reform, and the impending Cadillac Tax are causing employers to embrace voluntary benefits as a means to attract and retain top talent.

What are voluntary benefits?

Whether you call them ancillary benefits, worksite benefits or supplemental benefits, when chosen and packaged well, they are customized benefit solutions for the financial well-being of your employees.

How voluntary benefits create more value:

• Provide more choices to meet the needs of your workforce

• Support the health and wellness of your employees and their families

• Help employees reduce out-of-pocket expenses

• Add value for little-to-no cost

• Support your business goal of maximizing your investment, creating a productive workplace

Customized Benefits Strategy

of employees agree that voluntary benefits are a good option for companies to use, when viewing their own needs and employers’ limited budgets.1

of employees look favorably on employers offering a full range of benefits, believing these help them secure and simplify their lives.1

Employees also agree that they’re more productive during work hours and think more highly of their employer if they’re offered a range of benefits, including voluntary benefits.1

90%

90%

1 LifeHealthPro, “Employees Favor Companies That Offer Voluntary Benefits,” Warren Hersch, July 18, 2013, quoting a WellPoint survey.



Why the Renewed Interest in Voluntary Benefits?

While in past years some employers dismissed these benefits as unnecessary add-ons, health care reform has brought new meaning and importance to voluntary benefits.

Rising health care costs and the Affordable Care Act (ACA) have resulted in benefits becoming a financial and competitive balancing act for employers. Voluntary benefits can help employers provide added incentives to employees without having to allocate additional dollars to their budget. It’s a win-win when these benefits are included as part of a company’s employee benefits package.

The Advantages of Voluntary Benefits for Employers

68%said they plan to reevaluate their benefits strategy to offset reform’s impacts

75%said managing health care costs, especially in the context of health reform, is one of their most worrisome challenges

85%say they expect health care costs to rise in the next five years as a result of the law

Source: Deloitte, 2012 Deloitte Survey of U.S. Employers: Opinions About the U.S. Health Care System and Plans for Employee Health Benefits (2012).

The impact of health care reform on companies



While employers recognize the need to lower health care costs, the survey below shows that only 13 percent are actually planning to do so. Most indicate they will maintain the same budget, and 28 percent will increase their benefits budget.

Many companies are finding they are able to maintain the same benefits budget by moving to high-deductible plans — but these often result in a lower level of benefits.

In 2018, health insurers and employers with self-funded plans will be required to pay a 40 percent non-deductible excise tax against the excess value of such plans.

The good news is that most voluntary benefits will be excluded from this tax, such as stand-alone dental and vision benefits, plans covering specific diseases such as cancer insurance or “dread disease” insurance or hospital indemnity plans that pay benefits pursuant to a schedule.

Employers thinking about cutting benefits to avoid the Cadillac Tax can protect their human capital investment by offering voluntary benefits to help employees fill the coverage gap left by high-deductible plans. For instance, critical illness coverage can help employees cover medical bills not otherwise paid by major medical plans, including copayments and deductibles. And, again, these voluntary benefits will not be included when calculating the value of plans subject to the Cadillac Tax.

Additionally, the Cadillac Tax will create an environment where health savings accounts, health retirement accounts and flexible spending accounts will be re-duced and potentially eliminated. Contributions traditionally made by employers as well as those contributed pre-tax by employees will count toward the minimum thresholds that trigger the tax.

Voluntary benefits can serve as valuable voluntary medical options as the premi-um costs of such plans are not included in the excise tax calculation if offered on a post-tax basis. As noted above, however, HSA contributions will be included.

How will employers deal with health care reform?

54% 50% 56%

Maintain the same budget

28% 30% 27%

Increase the budget

13% 16% 10%

Decrease the budget

6% 4% 6%

Not sure

Companies with <500 employees

Companies with 500+ employees

Total Employers

MetLife 12th Annual U.S. Employee Benefits Trends Study, 2014

Cadillac Tax & Voluntary Benefits




Most employers view reducing costs and benefits plan optimization as their most important benefits strategy. Employers are seeking out new solutions to help them meet the healthcare reform mandate of providing affordable coverage without incurring additional costs.

The insurance industry has long held that there’s a correlation between accident and disability insurance, and reduced workers’ compensation claims. One report confirms that belief. Total workers’ compensation benefits paid to injured workers in 2011 cost American employers $77.1 billion (latest statistics available).1

According to the Aflac Workers’ Compensation Report2, 42 percent of all companies providing voluntary accident and disability insurance reported declines in their workers’ comp claims, some up to 50 percent less.

In a survey of 600 companies, the study showed that 14.5 percent of employers offering voluntary accident and/or voluntary disability insurance reported declines of 50 percent or more, and 16 percent experienced declines of 25-49 percent.

Broken into size categories, the declines were most frequent for larger employers, who reported a 55 percent corresponding decline in workers’ comp claims. Some 34 percent of small- to mid-sized companies reported the same results.

Understanding the impact of the ACA for our company

Educating employees about the impact of health care reform

38%

44%

40%

49%

47%

49%

Companies with <500 employeesCompanies with <500 employees

Companies with 500+ employeesCompanies with 500+ employees

Total EmployersTotal Employers

MetLife 12th Annual U.S. Employee Benefits Trends Study, 2014MetLife 12th Annual U.S. Employee Benefits Trends Study, 2014

1 Workers’ Compensation: Benefits, Coverage, and Costs, 2011, National Academy of Social Insurance, August 20132 Aflac Workers’ Compensation Report, Lieberman Research Worldwide, 2014, as viewed on Insurance Business America News

Workers’ Comp & Voluntary Benefits




Add Value with Voluntary Benefits

Historically, these ancillary benefits have provided companies a cost-effective and personalized suite of products designed to help them attract and retain top talent. But in today’s environment where employees and their families are likely to incur more out-of-pocket expenses, voluntary benefits can cost-effectively fill gaps in your coverage.

A shift to consumer-driven health plans has placed tremendous importance for employers to engage voluntary strategies. In fact, 40 percent of employers report they are preparing to shift to CDHPs in order to avoid the 2018 Cadillac tax; and 44 percent plan to consider a CDHP with voluntary benefits in the next three to five years.

Voluntary benefits have the added value of rounding out core offerings while appealing to a wider group of employees. For instance, executives with athletic children will focus on accident policies to provide the added coverage needed in the event of a serious injury not otherwise covered by their major medical policy. Employees with higher disposable income may choose travel insurance and international medical. Those with young families may opt for added life insurance or financial counseling.

Employees enrolled in voluntary benefits programs enjoy greater financial stability compared to those not offered such benefits

Voluntary Benefits: A Solution



Voluntary benefits can become part of a company’s overall benefits strategy. These added benefits will help employees span the gap left by increased deductibles.

Employers are also offering portable voluntary products to assist in transitioning older workers into early retirement. These products can serve as a buffer between health coverage traditionally carried by this demographic to offer them financial peace of mind.


29%

37%

Confident in financial future

39%

49%

Have a financial plan

42%

52%

Have peace of mind

49%

64%

Have more than $1,000 in savings

of respondents (American workers) of a recent Gallup survey placed a higher premium on voluntary benefits following the last recession.1

1 EyeMed survey of 552 business leaders

82%

Not offered Enrolled Source: Aflac Workforces Report, 2014



With the workforce in most companies comprised of a more diverse group of people than ever before, those employees value having a choice when selecting benefits that are customized to their particular needs.

The chart below demonstrates the perceived value of offering personalized benefits among a broad employee demographic.

A Generational View of Personalized Benefits Employees value having benefits personalized to meet their individual circumstances and age.


80%

Total Employees

86%

Gen Y

77%

Gen X

80%

Younger Boomers

81%

Older Boomers

of employees want the ability to customize all of their benefits to match their individual lifestyle.1

1 Employee Benefit News, “Survey Finds Majority of Employees Want Customizable Benefits,” Tristan Lejeune, Mar. 1, 2013.

86%

Source: Aflac Workforces Report, 2014



Increase employee satisfaction and span the coverage gap

Voluntary benefits address basic life needs including health, wealth accumulation and lifestyle requirements. The following voluntary benefits can be part of your employer benefit program offerings.

Voluntary Benefits Offerings

of business leaders say that their employees are interested in customizing benefits to meet their needs.1


71%

Hospital Indemnity offers employees an easy way to add protection without increasing benefit costs. It complements existing medical coverage and narrows the coverage gap from out-of-pocket expenses.

Critical Illness/Cancer bridges the gap between traditional medical coverage and disability, providing protection against potential financial consequences.

Dental Insurance supports employees’ dental health and significantly reduces out-of-pocket expenses.

Vision Care covers services and products (glasses, contacts, etc.) provided by eye care professionals.

Telemedicine offers 24/7 access to a national network of U.S. board-certified doctor. Employees receive help with non-emergency problems, a diagnosis and prescription without an office visit.

Accident complements an existing health plan and closes the coverage gap from out-of-pocket expenses such as deductibles, copays, and non-covered medical services.

Limited Benefit Plans offer lower premiums but with fewer benefits than a traditional health insurance plan. These plans cover specific conditions and diseases such as cancer, but do not cover every health condition or replace traditional health insurance.

Long-Term Care provides for care of a long-lasting illness or injury, which is not covered by medical and disability payments.

Worksite Wellness offers discounts on various health-related voluntary benefits depending on the employee’s overall wellness.

Health



Voluntary Benefits Offerings

Pre-paid Legal provides discounted legal services including consultations on legal matters, preparation of legal documents, etc.

Identity Theft protection offers ID theft reimbursement insurance and access to domestic fraud resolution experts.

Accounting Services provides employees assistance with tax preparation, financial analysis, etc.

Life Insurance provides employees with essential financial protection for their families following the insured’s death.

Short and Long-Term Disability Income protects employees’ income during periods where the insured is unable to work.

Wealth protection & accumulation

Auto and Homeowners offer employees discounted auto and home insurance rates for personal property and casualty insurance products.

Travel Insurance covers employees who frequently travel, often providing discounted rates.

International Medical covers employees who travel abroad.

Pet Insurance provides for veterinary expenses.

College Tuition Benefits help employees save for future college expenses.

Goods and Services offer savings for employees via program discounts on goods and services.

Personal




The voluntary benefits outlined on previous pages are coverages and products available to employees through personal election. They contribute to an employee’s work-life balance, are cost efficient and portable. Voluntary benefits are important because:

• They can be 100 percent employee-paid with premiums paid via pre-tax payroll deductions

• Coverages are available to most full-time and part-time employees

• Most prices for policies are locked in once issued and will not go up in cost — so there is no annual renewal

• The employer provides the benefit options from which employees select only those most relevant to their needs and also manage the costs of same

• The products are solicited and enrolled by a carrier or enrollment vendor

• Benefits administration is streamlined by automatically deducting the cost through payroll deductions

For these and other reasons, employers are including voluntary ben-efits as a vital component of their overall benefits strategy. Remaining competitive, attracting and retaining top talent and ensuring the financial well-being of employees can be accomplished through a comprehensive voluntary benefits program.

The Benefit of Voluntary Benefits



You have critical decisions to make.

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Work with a HUB advisor today to learn how voluntary benefits can work with your benefits strategy.




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This information is provided for general information purposes only. HUB International makes no warranties, express, implied or statutory, as to the adequacy, timeliness, completeness or accuracy of information in this document. This document does not constitute advice and does not create a broker-client relationship. Please consult a HUB International advisor about your specific needs before taking any action. Statements concerning legal matters should be understood to be general observations and should not be relied upon as legal advice, which we are not authorized to provide.

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About HUB International

HUB International is a global insurance brokerage providing property and casualty, life and health, employee benefits, investment and risk management products and services through over 300 locations across North America.

As a leading broker and advisor for employee benefits, HUB International is committed to delivering solutions with thoughtful strategic planning, valuable professional services and technology-based solutions that enhance our clients’ financial performance and position them as an employer of choice.


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Voluntary Benefits eBook

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