The Affordable Care Act (ACA) has brought about big changes in the health insurance industry, and brokers must adopt new roles and offer innovative solutions to remain competitive. At the same time, the complications of providing health benefits are spurring more conversations among C-suite executives, who now rely on their brokers to help control costs and provide competitive advantages. Employees themselves are still adjusting to their roles as consumers as they take on more costs and risks in the retail healthcare market.
These changes have created great opportunities for adaptable brokers. The growing demand for voluntary products, in particular, has brought hundreds of new players into the field, expanding the need for new and robust revenue streams. It is no longer a question of if, but when, clients will purchase voluntary benefits, and firms need to be proactive in offering them. Direct competition with other brokers isn’t the best approach, however. For most firms, the most successful, sustainable business model is to partner with trusted experts in voluntary products.
Voluntary Benefits: A Non-Negotiable
Three trends have driven the recent growth of voluntary benefits, and providing them has become all but essential for forward-thinking brokerages. Employers are facing higher group health care costs, with 49 percent reporting that controlling costs is a top business objective.[i] Employees are paying more, with 81 percent experiencing an increase in the family coverage contribution.[ii] And among brokers, 57 percent report that rising healthcare costs is the top issue affecting their clients’ decisions.[i]
For employers, the need to control costs is driven by operating expenses and labor costs, both of which have sharply increased since the ACA’s passage. Benefits play a major role in prospects’ job decisions, and 59 percent of workers actually prefer jobs with slightly lower pay and more robust benefits packages.[i] Employees also expect education and support for those benefits, and that support requires additional personnel and technology.
On the employee side, contribution costs are rising across the board. In 2014, workers paid an average of $4,823 for family coverage including deductibles and copayments, average employer-sponsored premiums rose to $16,834, and roughly half of employees had to pay less than $1,000 for out-of-pocket expenses.[i] [ii]
As for brokers, 89 percent agree that rising health care costs are directly impacting their clients’ abilities to offer benefits. Fortunately, 48 percent of employers report that they’ll be relying more on their brokers to make benefits changes in 2015, and brokers themselves say the top reason their clients would consider voluntary is to offer a wider range of options.[i]
Ultimately, offering voluntary benefits is one of the most financially viable ways for employers to improve worker satisfaction and reduce turnover in the post-ACA environment. Brokers who sell voluntary products are more likely to increase their client bases and grow their sales, and those who don’t are twice as likely to experience declining sales. Not surprisingly, a majority of brokers plan to increase their voluntary benefit revenue in 2015, and 45 percent expect their proportions of voluntary sales to increases within the next 12 months. [i]
Why Not Take the Plunge?