It’s a new era for benefits.
With health care reform forcing HR to navigate so many changes, many are thinking critically about how to stay in the black while still providing quality employee benefits.
Many employers are considering cost-saving measures. One tactic might be to switch from an employer-paid, long-term disability plan to one offered on a voluntary basis. This might be seen as a win-win situation for employers, as they’re providing a competitive benefits package but at little-to-no expense to them.
However, employers considering a greater emphasis on voluntary plans must find ways to educate employees about why they need coverage. If employees don’t understand voluntary options, that often translates into lower enrollment. In the long run, this can hurt both employees and employers financially.
One smart enrollment strategy includes reaching out to Millennials, who might not understand the need for LTD coverage. Reaching this group requires a fresh and engaging approach. Because Millennials are accustomed to instant technology access and information right at their fingertips, employers should consider a variety of new online educational tactics to boost enrollment.
Many HR managers might not consider one side effect of shifting employer-sponsored LTD coverage to employees: They can choose not to elect coverage and face the prospect of working through a disabling illness or injury. Employees who lack coverage could actually hurt productivity and increase an employer’s health care costs.
Consider the possibilities for an employee who becomes disabled and does not have voluntary LTD coverage:
- He or she can take a leave of absence from work and submit a Social Security Disability Insurance claim. The chances of receiving SSDI benefits are low, however, as 65 percent of initial claims were denied in 2012, according to Social Security Administration data.
- He or she can continue working through the illness or injury as long as possible.
With such low approval for SSDI claims, many employees without disability coverage choose to stay at work and work through their illness or injury because they don’t have an income-replacement safety net. This phenomenon, called presenteeism, is productivity loss associated with employees working through medical conditions. This can cause a major drain on an employer’s bottom line. There are many ways presenteeism can hurt a workplace:
- Employees working slower than normal;
- Employers needing to find replacement employees;
- Employers needing to train new employees on job functions;
- Changes in product or service quality;
- Overtime for other employees.
Young employees need protection
While many employers might view presenteeism as something that affects older employees, young workers also are at risk. One in four of today’s 20-year-olds will become disabled before they retire, according to the Social Security Administration. In December 2012, more than 2.5 million disabled workers were in their 20s, 30s and 40s, based on Pew Research numbers.
Disability benefits help protect the income of employees suffering from disabling conditions. The Millennial generation, one that has been subjected to the pressures of an uncertain economy and a lackluster working environment in recent years, is vulnerable to the risks disability insurance protects against.
The median wealth of households headed by adults younger than 35 had 68 percent less wealth than households of their same-age counterparts had in 1984, according to the Pew Research Center. This decrease in income makes it seem unlikely that they would have the savings to help them withstand interruptions in their household incomes.
They also have a lot at stake: Millennials today tend to have more to protect than those in the same age range did 30 years ago. In fact, in 2009, 38 percent of adults under age 35 owned their own homes, compared with 4 percent of the same age group in 1984. In addition, 17 percent of this same group has an IRA compared with 1 percent in 1984.
A two-part strategy for voluntary success
These statistics highlight the crucial need for employers to find opportunities to educate employees about their benefits needs. A benefits offering is only as strong as its enrollment strategy. By ensuring voluntary benefits are backed by a strong educational campaign and supported through online enrollment, employers can help increase participation and decrease costs elsewhere.
By harnessing the Millennial generation’s demand for instant information and educational training, employers can bridge the information gap and educate Millennial employees on the importance of voluntary LTD insurance. Here are two types of communications initiatives that can assist HR managers and encourage enrollment:
No. 1: Educate Millennials online
Especially for employers with young employee populations, it’s important to find fresh, engaging ways to educate and assist employees about their benefits needs. The Millennial generation demands instant technology access and information right at their fingertips. Using an online educational module is an opportunity to inform them of the need for coverage and, in turn, encourage enrollment.
Insurance carriers and industry groups have communication and education resources that demonstrate the value and potential of the coverage employers are providing to their workforce. Consider passing along tools such as the Council for Disability Awareness’ Personal Disability Quotient calculator and Earnable Income Quotient tools to help employees understand the financial impact of a disabling illness or injury.
No. 2: Paperless enrollment — and benefits administration
Once employees are aware of the need for disability insurance, employers can go a step further to better engage Millennials in the voluntary market. Online modules can help employees understand the disability benefits available to them and complete online enrollment. These modules offer employees a go-to benefits resource that can help them overcome enrollment barriers by streamlining the process.
Many modules can be customized for an employer to include specific employer benefits and features. They also can help employees learn the basics of how their unique policies work, including how to estimate their needs, select appropriate coverage and, ultimately, enroll. Online modules give employees an opportunity to take full advantage of their benefits and understand how their coverage meets their needs.
Encouraging online enrollment also can benefit an HR department. This process streamlines the paperwork for benefits administrators. Employees can update their medical information and beneficiary designations and make life updates (such as marriages, divorces, children, etc.) to their benefits profile — reducing the amount of time HR spends sending updates to the carrier.
Preparing for the future
Implementing an online educational module and enrollment platform can protect employees, especially those in the Millennial generation, from the financial risks of serious illness or injuries. Educating them, in a manner in which they are accustomed to learning, on the need for voluntary disability insurance also can lessen the risk of the financial impacts of a disability, better preparing them for the future.