There has been lots of discussion around the health care debate that 45 million Americans are uninsured and that 62 percent of bankruptcies occur due to medical expenses. However, what has not been heard is that there are 25 million Americans who pay for insurance but don’t have adequate and/or affordable coverage. Not only that, but 80 percent of those medically related bankruptcies are filed by people who have health insurance. These people are considered underinsured.

A host of factors have contributed to this new reality, not the least of which is increasing pressure on company leaders and HR executives to streamline finances in order to simply stay afloat during this wave of economic uncertainty. Regardless of how the country got here, the stark reality is that many Americans are underinsured — generally defined as people who have health insurance but spend 10 percent or more of their income on out-of-pocket medical expenses.

Workers’ financial strain = employer’s financial pain
Slashed payrolls, furloughs, and disappearing bonuses have all led to an understandably anxious public focused on protecting their families and finances. At the same time, employers are seeking cost-effective ways to safeguard and retain a healthy and productive workforce. In fact, research indicates that people who are underinsured are more likely to go without needed health care and have problems paying medical bills, compared with people who have adequate health insurance.

Many companies are acknowledging the effect that financial stress and distraction can have on their bottom line. Sixty percent of employers agree that productivity declines when employees are dealing with an illness or accident in their families, and employees’ financial problems affect their job performance. Employers estimate that an average of 11 percent of payroll was lost due to absences last year.

Closing the insurance gap
Voluntary insurance policies are valuable tools to help close the insurance gaps among Americans in any economy, as well as protecting workers against an unexpected health event, associated expenses, and potential missed time. Voluntary insurance pays workers cash in the event of an accident or illness to help cover expenses such as mortgage, rent, and utility bills — ultimately helping to reduce financial burdens and related stressors associated with medical events.

Voluntary insurance can be a cost-effective way for employers to bolster benefits packages because it is at no direct cost to employers. Further, well-protected, adequately insured individuals make for more productive workers because with less time to worry about how they’ll pay the bills, there’s more time to focus on getting the job done. In fact, according to the 2009 Aflac study “Small Business — Now More Than Ever,” employees with voluntary insurance coverage are less concerned overall with medical finances than those without voluntary insurance.

Market dynamics tell the story
At a time when the recession has influenced every sector, the voluntary benefits industry has not only endured the economic upheaval, but has seen a growth in sales and popularity. According to LIMRA’s U.S. Worksite Sales Survey Third Quarter 2009, voluntary benefits were growing faster than health offerings — 7 percent ahead of last year’s pace.

Why the growth? Arguably, offering voluntary insurance options to employees not only solves the need to help close insurance gaps among Americans, but it can provide a cost-friendly solution to employers at a time when they need it most. According to “Top Trends in Voluntary Benefits,” a survey conducted by the International Foundation of Employee Benefit Plans, more than three-quarters of employers feel that offering voluntary benefits is a win-win option for their employees and the companies.

With core employer-sponsored benefits thinning with rising costs and financial pressure, the role of voluntary insurance is expanding and growing more important. Today’s voluntary insurance includes coverage that exceeds an employee’s core benefits package (e.g., major medical and 401(K)), such as policies for accident, cancer/specified-disease, dental, life, short-term disability, specified health event, hospital confinement indemnity, hospital intensive care, lump sum critical illness, and vision.

Understanding the trends can help you offer an appropriate solution to employers at a time when it can benefit them most.

Tom Giddens is senior vice president and co-director of U.S. Sales at Aflac. He can be reached at 800-99AFLAC.