Voluntary benefits provide safety net for employees with high deductibles health plans
As more employers introduce high deductible plans to employees, many are also adding voluntary benefit products to help supplement coverage gaps in the plans. From critical illness to accident and long-term care, voluntary benefits products can help mitigate the risk of high deductibles and co-insurance. These additional benefits cover a fixed amount in the event an employee is diagnosed with a serious illness or has an emergency accident or hospitalization. Despite their appeal, voluntary benefits have fallen by the wayside, since many employers are primarily focused on core benefits like medical, dental, vision and 401(k) plans. At the same time, they may be wary about overwhelming employees with additional information and plan choices.
Taking the time to consider voluntary benefits and understanding their value is very important, especially for employees who are unable to pay high deductibles and other expenses not covered by their major health care plan. Having a safety net in the case of an unexpected crises can be a huge life-saver, especially when looking at statistics about the financial situation of today’s workforce. A 2014 Aflac Workforces Report found that almost half of employees have less than $1,000 available for unexpected medical emergencies, and most high deductible plans have deductibles that are much higher.
While there are compliance requirements surrounding certain voluntary products, helping employees understand the value of these benefits is essential and worth the time and effort. Furthermore, as more employers look into offering voluntary benefits, insurers have worked to create simpler, easy to use products for employers to introduce to employees during open enrollment sessions. Plan administration is also less complex, since many voluntary benefits now function like group plans and are payroll-deductible. Some employers have even gone as far as providing employees with a base level of critical illness, hospital indemnity or accident coverage at no cost, and then offering them the option to purchase additional levels of voluntary coverage for a higher premium. Since these types of scenarios tend to increase employee participation rates, insurance carriers are more likely to offer lower coverage rates as well.
Employers looking to incorporate voluntary benefit plans in combination with high deductible plans should focus on clear communication and education with their employees to avoid information overload and confusion. Benefits consultants recommend introducing additional benefits in stages – adding more over a three to five-year period based on each individual’s needs and as they are realized over time. This process helps employees feel more at ease as they transition into a high deductible plan, while also equipping them with the knowledge and awareness they need to make more informed decisions about their health care.
For more information, we encourage you to speak with your WGA Employee Benefits team.
About the Author
Michael Moran is a Senior Vice President at WGA in the Employee Benefits Group, specializing in health and welfare insurance programs for WGA clients.