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Some economists–and many hopeful business people–predict a turnaround in the U.S. economy this year. Whether they are right or not, one trend not expected to change is rising health care costs.

Premiums for employer-sponsored health insurance rose an average of 11% in 2001, and another round of double-digit increases is expected in 2002.

Even worse, more than 90% of the employers who participated in another survey believe health care costs will continue to escalate at double-digit rates for at least the next five years.

At the same time, the economic downturn has led to layoffs and a softer employment market. With more candidates for fewer jobs, some employers may view benefits packages as less important to attracting and retaining top talent. They may even be tempted to cut back health benefits as a cost-saving measure.

More than 70% of employers in one survey reported they might reduce benefits or raise employee co-pays in the coming year, while more than half said they intended to pass cost increases along to their employees.

Tempting as it may seem, cutting back benefits is not only unwise, it is unnecessary.

Benefits are still a key factor for workers considering different job opportunities, especially in still-tight fields such as nursing. For those who do stay, slashed benefits packages can affect morale and productivity.

Most importantly, a more innovative response is easily available to meet employers and employees needs.

That response is supplemental insurance. This type of insurance allows employers to spend less while offering employees more choices.

In addition to offering new insurance options, a good supplemental insurance provider also will offer strong benefits communication, enrollment and service features.

The result is a win-win situation: employers shift some health care costs to their employees while still offering a competitive benefits package–in fact, a larger total compensation package. Meanwhile, employees better understand and appreciate their benefits while they design coverage specifically tailored to their needs.

Here are some key questions your employer clients should keep in mind when implementing a supplemental benefits program:

How strong is the employee communications program? A strong employee communications program is crucial. It may even be the most important part of your plan, because it can help employers build goodwill with employees and do all the other things shown in the chart on this page.

Do the benefits enrollers serve as human resources partners? Benefits enrollers who can present a complete financial picture to employees and help them view their benefits as part of the total compensation package offer an invaluable service to employers and employees. For instance, they can:

–Work with each employee to identify individual insurance needs, based on compensation, tax and family information provided by the employer.

–Conduct one-on-one meetings with each employee.

–Present an overview of benefits offered.

–Provide a benefit statement recapping core benefits provided by the employer and additional services purchased by the employee.

–Help ensure consistency and confidentiality of benefits communication.

Does it use both high touch and high tech? One-on-one enrollments can be effective and efficient for the employer, employees–and the supplemental insurance provider, provided you have the right technology.

In particular, providers that offer laptop enrollment technology can improve the accuracy and speed of enrollment by completely automating the process. In addition, they can: download payroll information; upload employees enrollment choices and corrected contact information to the employers system; and help ensure greater consistency of communication to all employees, even in multi-location enrollments.

Which supplemental products are the right ones for our company?

For instance, the supplemental products your client selects should complement the companys core benefit program, not compete with it. As an illustration, an employer shouldnt offer supplemental disability insurance if it already provides an employer-paid plan–because people may then become over-insured, which may be an invitation to go out on disability.

In addition, your employer client should clearly understand what benefits the company can afford to provide its employees; and factor in the competitive landscape of the industry and what benefits other employers in the field are providing.

What level of service does the benefits provider offer after the sale?

Exceptional customer service may be a deciding factor when considering supplemental insurance. Employers might look for such services as: electronic billing; 24/7 claims filing; and bilingual enrollers and service providers.

is vice president-sales for the Southeast region of Colonial Life & Accident Insurance Company, a Columbia, S.C. subsidiary of UnumProvident Corp.


Reproduced from National Underwriter Life & Health/Financial Services Edition, April 15, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.