The workplace continues to be an important channel for long term care insurance sales. As LIMRA International found, 51% of individuals who purchased LTC insurance in 2008 bought their coverage through an employer-based plan.
Many of these plans are voluntary, employee-pay-all offerings. A key measure of success for voluntary LTC insurance plans is participation–from employees as well as others eligible for the plan. Strong participation eases the risk of reduced underwriting. It also increases sales and marketing efficiency by spreading these expenses over a larger number of employees and beneficiaries.
A number of employer factors can help the voluntary benefit producer determine whether a plan will achieve maximum participation. Knowing these factors can help in determining where to focus sales efforts.
Factors influencing success
MetLife was one of the sponsors of a survey in 2009 that posed questions to benefits managers at companies of various sizes–some with above-average LTC insurance plan participation and others with below-average participation. The benefits managers were asked 12 questions designed to identify the factors most important to the enrollment success of an LTC insurance plan.
The findings of the survey suggest that there are many factors influencing the success of an employer-sponsored LTC insurance plan in enrolling employees. These include characteristics of the employer, such as:
–The reason the employer elected to offer the plan;
–The size of the employer;
–The geographic dispersion of the employer’s employee population; and
–The employer’s experience with participation in other voluntary benefit offerings.
The characteristics of the employee population were also found to be relevant to enrollment success, in particular, the age and income of the employees and the general level of long term care awareness.
Other significant factors included the mechanics of the enrollment and communications process, such as the availability and use of e-mail communications and other employer-sponsored communications; group meetings; face-to-face meetings; and online enrollment.
The survey also found that whether the employer enrolled the LTC insurance plan “on-cycle” or “off-cycle” makes a difference–in other words, whether the LTC insurance benefit was offered concurrent with or separate from other employee benefit offerings.
While these factors were all found to influence enrollment success to varying degrees, there was strong agreement among benefits managers that employer support was the most important factor affecting enrollment success. The survey results suggest that strong employer support could turn what would otherwise be an average outcome into superior results and could overcome many inhibiting factors such as lower average income and lower average age demographics within a population of participating employees.
Measurable employer support
Employer support can be difficult to quantify because it occurs in many different forms, some of which can be highly subjective. But there are still forms of employer support that can be measured. These include:
–An employer’s use of the company letterhead to promote the benefit;
–Its willingness to use internal communication channels;
–The endorsement of a senior company executive in communications for the plan;
–Placing the plan prominently on the employer’s benefits election website; and
–Allowing both group and face-to-face meetings to explain and market the plan.
Brokers and consultants expect employers to grant access to employees through various employer communication channels and on-site meetings. However, because some employees will not necessarily be favorably disposed to hear about the plan and consider it, access in and of itself does not ensure success.
Rather, employer support really needs to result in favorable access to employees to ensure their meaningful consideration of LTC insurance. By “favorable access” I mean having access to employees who are favorably predisposed to hear about the benefit and predisposed to strongly consider purchasing it.
There are a number of techniques that brokers and consultants can use to secure favorable access to employees. These include:
–Holding preliminary enrollment meetings with senior level company executives in advance of conducting enrollment meetings with the employee population, to build support for the plan.
–Enlisting the active support of the employer’s benefits manager and other senior level executives in encouraging employees to participate in educational meetings and Web seminars.
–Having the employer’s benefits manager and other senior level executives actively encourage employees to consider the benefit being offered.
While it can be challenging to motivate employers to create positive internal buzz about an employee benefit offering like LTC insurance, it is critical for achieving the best possible enrollment results. Employers need to appreciate the importance not only of making a benefit available but also of making sure that all eligible employees fully understand and considered it.
A sizeable number of employees are worried about future LTC needs. MetLife’s 7th annual employee benefits trends study found more than half of full-time employees across all age groups say they are very concerned about their own LTC needs, and 61% are very concerned about providing for their spouse or partner’s needs. Furthermore, 45% are very concerned about having the financial resources and time to care for aging parents or relatives.
In this economy, the MetLife study found, 56% of employees say they appreciate their workplace benefits more than ever before. Working to ensure that benefits such as LTC insurance are more fully used helps increase the value of those offerings for all stakeholders.
John Sherman is national sales director of MetLife Long Term Care, a unit of MetLife Inc., New York. He can be reached via email at [email protected].