How to Use Voluntary
Benefits to Reduce Your
Benefit Costs Pressure
Jay Hutchins
Vice President
Broker Marketing & Sales
Costs continue to rise

Health insurance
premiums for family
coverage up 131% in past
decade

Average cost of group
health coverage expected
to rise 8.8% from 2010 to
2011*

Smallest employers pay
18% more for health plans
Sources: Kaiser Family Foundation and Health Research & Educational Trust,
“Employer Health Benefits,” 2009; Hewitt Associates, “U.S. Health Care Cost Rate
Increases Reach Highest Levels in Five Years, According to New Data”
Competitive benefits are critical
62%
59%
52%
49%
42%
Source: LIMRA: Navigating the Employee Benefits Marketplace, 2011
38%
Most
important
factors when
considering a
new job with
comparable
salary
4 keys to benefits cost control

Redesign

Utilization

Eligibility

Wellness
Benefits Plan Redesign
Employers respond to rising costs
Absorb rate
increase at
renewal
Shift more
contributions
to employees
Shift more
contribution to
Employee
Direct impact
to employer’s
bottom line
Direct impact
to employee’s
pocket book
Redesign with
highdeductible
health plan
Increases
employee’s
out-of-pocket
exposure
Current plan
New plan
Employee
out-of-pocket
costs
Expenses
covered by
Expenses
health plan
covered by
health plan
Employee
out-of-pocket
costs
Expenses
covered by
health plan
Source: National consumer study, Financial Industry Regulatory Authority Investor Education Foundation in
consultation with the U.S. Department of Treasury and President’s Advisory Council on Financial Literacy, 2009.
Voluntary solution
Employee
out-of-pocket
costs
Medical
gap
coverage
Expenses
covered by
health plan
●
Employer saves
money by
redesigning
health plan
●
Employees
receive benefits
to help pay outof-pocket costs
from a hospital
confinement or
other covered
health care event
Types of voluntary benefits

Supplemental health

Accident

Disability

Life

Critical illness and cancer
Employers value voluntary benefits
Source: Ron Neyer, “The Voluntary Benefits Report Card,” LIMRA International, 2007
Common misconceptions

Administration is too complex

Employees aren’t interested

Enrollment takes too much time

Designed for large corporations
Workers value voluntary benefits

Flexibility in using
claim payments

Portability

Stable coverage and
premiums

More lenient
underwriting

Convenient payment
Utilization
Benefits understanding is critical
Importance
Level of Knowledge
5%
21%
90%
Source: Colonial Life, SHRM national conference survey, June 2008
74%
Human resources challenges
Source: Colonial Life & Accident Insurance Company, “Colonial Target Model and Larger Case Research,” May 2008
Employers agree 1-to-1
communication works
91%
Yes
3%
No
Source: Colonial Life, SHRM national conference survey, June 2008
Employees say 1-to-1 works
Value of Meeting
Not important
Important
Very
important
Source: Colonial Life post-enrollment surveys, Jan.-Dec. 2010
Benefits Understanding
Not improved
Improved
Significantly
improved
Eligibility
Dependent verification
Dependents in Plan
100
500
Estimated Ineligible
5%
5%
Average Annual Cost per
Dependent
$1,900
$1,900
Potential Savings per Year
$9,500
$47,500
Source: Continuous Health company records
Benefits of dependent verification

Efficient process
in 1-1 enrollments

High return on
investment

Clear
communication

Prevent claims
problems
Wellness
Wellness programs

Exercise

Smoking cessation

Online health assessments

Onsite health screenings

Telephone nurse line
4 keys to benefits cost control

Redesign

Utilization

Eligibility

Wellness
Questions?