This is an exciting time for the employee benefits industry.
The Patient Protection and Affordable Care Act (PPACA) has precipitated a new appreciation for voluntary benefits and a spike in enrollment. Businesses are enhancing their benefits packages to offset rising healthcare costs and to allow employees to fill the gaps left by high-deductible health plans.
Employees are taking a more active role in decisions about coverage. Carriers and brokers are responding with customized products and platforms that ease administration and cost for employers; and that assist employees in the decision-making process.
As an industry we now have the opportunity to pause, take a collective breath, and focus on the future of our business.
While the landscape of employee benefits is continually changing, the industry’s message to the market has remained relatively static. Healthcare costs are rising. Emergency savings accounts are shrinking. Employees are shouldering greater accountability and risk. We can provide products to help.
While these arguments are valid, ultimately PPACA prompted employers to make fundamental changes in their approach to employee benefits. How then, as an industry, do we effectively communicate the value that our products provide, and help employees achieve long-term financial security?
The answer is simple. It’s time to tell a new story.
The onus is on carriers and brokers to change the public’s mindset and position employee benefits — in conjunction with medical insurance — as a crucial component of every American’s financial strategy. Let’s explain to employers and employees how these benefits impact their bottom line.
Let’s talk about the portability of our products and how individuals can protect their assets by maintaining policies during the transition to a new job. Let’s also talk about employee benefits in a way that it clear and understandable to the lay person, not just those who live and breathe insurance.
For a moment, let’s forget about premiums, terms and disclosures and talk about what these products were created to do, which is assist individuals in meeting monthly expenses in the wake of an illness or injury, thus helping them protect their retirement savings and remain on track to achieve their financial goals.
The Bottom Line
As an optimist, I believe most employers have their employees’ best interest at heart. However, we live in tough economic times that call for difficult financial decisions. The success of the employee benefits industry is contingent upon our ability to help people understand that our products are a “must-have,” and not a “nice-to-have.” To do that, we need to clearly articulate how these offerings improve an employers’ bottom line — specifically, their ability to recruit and retain top talent.
In 2013, Towers Watson surveyed 320 large employers about their “health care and total rewards strategies” in light of health care reform. Nearly half expected voluntary benefits and services to become more important over the next five years. A majority of employers offered disability (80 percent) and accident (68 percent) insurance benefits, and critical illness was cited as one of the top offerings being considered over the next two years.
The next generation of employees expects coverage options that enhance their work-life balance, improve their overall quality of life and safeguard their financial future. In the race for qualified candidates, a well-designed benefits package will become increasingly useful to employers in recruiting and retaining top talent.
Focus on the Future
The financial habits of Millennials have been well documented by a variety of sources, but this group remains an untapped market for the insurance industry. Reaching this generation of consumers requires thoughtful, targeted messages that address their unique needs and long-term financial goals.
In regard to finances, Millennials play it safe. A 2014 study by the Brookings Institution showed that more than half (52 percent) of adults ages 21-36 have their savings parked in cash. Millennials have seen the stock market falter, have watched their parents struggle through two recessions and are burdened with significant student debt. As a result, some experts have deemed Millennials “the most financially-conservative generation since the Great Depression.”
Unfortunately, life is not without risk. In December 2012, Disabled Worker Beneficiary Data from the Social Security Administration reported that more than 2.5 million disabled workers were in their 20s, 30s and 40s. Faced with an illness or injury, a young adult without the necessary cash reserves could be forced to mortgage their future by racking up credit card debt to pay medical bills. For a nominal monthly cost, accident or long-term disability coverage offered through the workplace provides a benefit that can reduce the financial burden on an employee, thus safeguarding their financial future.
Portability also comes into play when marketing to Millennials. A 2012 Forbes article regarding the job hopping habits of this generation reported that 91 percent expect to stay in a job for less than three years.
Continuing healthcare coverage after leaving a job is often cost-prohibitive, so many new employees experience a gap in coverage until they are eligible for benefits with their new employer, which could take up to 90 days. Few are aware that, during that time, they may be able to maintain accident, critical illness and disability income coverage to help protect their assets should they experience an illness or injury. That is why carriers like Voya Financial continue to devote resources to raise awareness among consumers about the ability and the need to continue employee benefits policies when changing jobs.
The Solution is in the Story
It goes without saying that a life-threatening health event can have a profound negative impact on a family’s financial well-being, but even a short-term illness or injury can derail one’s retirement readiness. To demonstrate that point, we need to present common, real-life situations that can help make products like disability income, critical illness and accident insurance more than just theoretical concepts. By demystifying these products, and presenting them as the solution to a problem, we’re able to tell a new story — one that positions employee benefits as an important part of every American’s overall retirement readiness strategy.