Americans are beginning to take a front seat in driving their health care decisions. Health care consumerism is on the rise and more employers are implementing consumer-directed health plans, such as high-deductible health plans and health savings accounts (HSAs), than ever before. Previously considered a nice-to-have, non-traditional option, voluntary benefits are becoming more mainstream and in demand by employees and employers alike.
Many organizations now recognize that making voluntary benefits available not only fulfills a core portion of their benefits offerings, but satisfies the growing demand among workers for more options — including life insurance — in protecting their income and financial safety. This is all good news for brokers and agents.
One hurdle that threatens to derail many clients from reaping the rewards voluntary benefits can deliver is a simple lack of knowledge. Just 40 percent of employees feel extremely/very informed about the benefits offered at their company. This may in part be due to a deficit of information about voluntary benefits and their role in financial and health protection.
As is often the case, lack of knowledge breeds creation of myths. A recent study conducted by Alfac discovered four common misconceptions about voluntary insurance options that brokers will need to address with clients.
Myth 1: Payouts from voluntary insurance policies can only be used for specified medical expenses, and pay doctors directly for medical bills.
According to the Aflac survey, two-thirds of employees (66 percent) and nearly as many HR decision- makers (62 percent) mistakenly believe that payouts from voluntary insurance policies can only be used for specified medical expenses. Also, more than half of employees and HR decision-makers (55 percent) believe that voluntary insurance plans always pay doctors directly for medical bills.
While this is true for major medical plans, voluntary insurance pays cash benefits directly to the policyholder, unless otherwise assigned, to be used however he or she may choose–from daily expenses like mortgage payments or rent to helping pay for gas to and from the doctor. Voluntary insurance plans are designed to help policyholders pay for the many out-of-pocket expenses that major medical doesn’t cover, including cash to cover copayments, deductible, and general living expenses.
Myth 2: Supplemental insurance costs way too much.
Many employees believe that supplemental insurance plans cost too much, with half of all those surveyed, and one-third of HR decision-makers, believing this is true. However, many voluntary insurance providers offer a range of products that fit most budgets. For example, Aflac offers consumers basic insurance coverage featuring accident, sickness and life insurance policies for less than $12 a week using standard rates.
The intent of voluntary insurance providers is to offer families broader insurance coverage and the protection they need to help ease the financial burden that an unexpected accident or injury can create.
Myth 3: It costs employers to offer voluntary insurance benefits.
Although voluntary insurance benefits have no direct cost to employers, fewer than half (44 percent) believe this is true. Further, one in four HR benefits decision-makers believe that employers pay all or most of the premiums for voluntary insurance plans. This misperception can be a costly one for companies, many of whom are seeking ways to keep health care costs down while still providing access to the coverage their employees need and demand.
Although some companies may choose to contribute some portion of the premiums, voluntary insurance plans are typically paid for entirely by employees. Consequently, most voluntary plans are portable, and belong to the employee–an aspect that is highly beneficial and important to many workers.
Making voluntary insurance policies available to employees not only has no direct cost to employers, but may reduce corporate taxes by cutting FICA tax contributions. Adding voluntary plans to a company’s offerings can help companies build robust benefits packages, while staying within budget/cost constraints.
Myth 4: Workers aren’t interested in applying for voluntary insurance plans even if they were offered.
Many HR decision-makers choose not to add voluntary insurance plans that could help workers with the financial obligations of unexpected health events because they feel their employees don’t have an interest in applying for such options. However, survey findings conclude quite the opposite. The majority (66 percent) of employees say if their employer did not provide the type and level of health insurance benefits coverage they desired, they would be willing to applying for additional insurance products to ensure their coverage is adequate.
Specifically, 59 percent of workers say they would be interested in purchasing some form of voluntary insurance benefits if they were offered by their employer.
When asked why adding voluntary insurance benefits would be important to them, the top three reasons given were:
- They offer me more options when it comes to health care coverage.
- They help to meet my needs.
- They give me more comprehensive insurance coverage.
Closing the knowledge gap
Brokers and agents can profit from a better informed client and consumer. Voluntary benefits, in particular, are not only growing in demand and popularity but also have the unique distinction of being one aspect of health insurance not affected by health care reform or legislation. Being aware of these top misunderstandings about voluntary insurance can help brokers and agents tailor their sales and education efforts to help close knowledge gaps.
Tom Morey, a 16-year insurance industry veteran, is Aflac’s vice president of product development. He oversees designs, pricing and execution to include product development, product positioning and corporate bids. Visit aflacforbrokers.com, call 1-888-861-0251 or send an e-mail to [email protected] to learn more.
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