A comprehensive, competitive employee benefits plan includes far more than major medical
insurance. Employers who want to attract and retain the best talent need to focus on the bigger
picture of their benefits plans. In fact, there are many other options to consider that will help
manage the bottom line and offer a benefits program that gives their business a competitive edge.
These include:
- Solutions that help control ever-increasing health insurance and health care costs.
-
Benefits that help bridge the widening the gap between what’s covered and what
employees pay for out-of-pocket created by the accelerating trend toward high-deductible health plans.
- Greater flexibility and choice in benefits to meet the needs of today’s increasingly diverse workforce.
- Communication support to ensure employees understand their needs and options, make the best choices for themselves and their families, and justify employers’ considerable investment in thebenefits package.
Employers who want to attract and retain the best talent
need to look beyond the short-term distraction of health
care reform and focus on the bigger picture of their benefits
plans.
Controlling costs
Despite all the debate on health care reform legislation, one fact is undeniably clear: It hasn’t
stopped health insurance and health care costs from spiraling ever upward. Health care premiums
have increased by more than 300 percent since 1999.1 And employers are continuing to struggle
with those growing costs.
Employers typically react in one of three ways:
-
Absorb the increases. Some employers try this first, but it has a direct, negative impact
on theirbottomline thatmay not be sustainable.
-
Drop health coverage. Most employers are avoiding this path. In fact, the percentage of
firms offering health benefits has held steady for the past five years
-
Shift more costs to employees. More than half of employers in one recent study are
increasing the amount of premium employees contribute toward their major medical
coverage, increasing the amount of coinsurance employees must pay, or moving to a high-
deductible health plan. Unfortunately, higher premiums and coinsurance can have an
immediate negative impact on employees. High-deductible plans keep health premiums
lower, but also increase employees’ financial risk.
However, many employers are turning to an additional solution:
redesigning their benefits package to include a higher-deductible health
plan, paired with limited medical benefits to reduce employees’ financial
exposure. Fixed indemnity limited medical benefit plans can help employees
cover out-of-pocket medical costs, including deductibles and coinsurance.
The benefits can also help pay expenses by paying for services such as
hospital stays in addition to the health insurance plan.
This type of coverage can be selected and paid for by employees,so it can be offered at no direct cost
to the employer.However,some employersfind they’re able to pay forsome or all ofthe coverage with
the premium savings from the high-deductible health plan. Total costs can even be lower than before,
without sacrificing coverage.
Closing gaps
Employees are falling further and further behind in the economic race with health care costs. The
average deductible for employer-sponsored health plans surged 13 percent in 2016.
By comparison, workers’ wages increased only 2 percent. In the last decade, the average
deductible quadrupled from $300 to $1,200 — at least seven times faster than wages have risen in
the same period.6 It’s even more at small firms with fewer than 200 workers, where average
deductible stop $1,600. For those with high-deductible plans, the gap is even wider.
At either end ofthatscale,manyAmericanworkerswould struggle to
pay the bill. Nearly half
— 47 percent — ofsurveyed Americans say they couldn’t cover a
$400 emergency expense or would have to sell something or
borrow the money. And close to a third went without some
medical care in the past year because they couldn’t afford it.
Limited Medical Benefit Plans can help bridge this widening
financial gap. Employees can choose from a variety of benefit
levels of coverage for themselves and family members. Benefits
are paid directly to the insured to use however needed — for out-
of-pocket medical or non-medical costs — and aren’t reduced by other insurance.
Because the coverage is offered through the workplace, employees can purchase it for less
than they could buy it on their own. Payroll deduction adds to the convenience and most
types of coverage can be paid for on a pretax basis, reducing the net cost. Pretaxing can also
save employers money by reducing payroll taxes.
Creating choices
There are five generations, many ethnicities and varying family situations among those in the
workplace today — all with different financial protection needs. The benefits that appeal to
young singles in their first jobs, mid-career workers with active families and veteran employees
eyeing retirement can be quite different.
The U.S. workforce is more varied than ever. The share of Hispanics in the workplace is
growing fasterthan the non-Hispanic labor force.10 Foreign-born workersmake up 28 percent of
the labor force in some areas of the country.
Limited medical benefits offer employers a solution to the challenging task of creating a
benefits program that meets the needs of this increasingly diverse workforce. Adding these
benefit plans— coverage that employees select and may pay for themselves — allows
employersto offer expanded choices, greater flexibility and affordability their workforce wants
and need.
Employees want these additional benefits: One recent study showed a third of employees
enroll in every type of coverage offered. The same study showed for nearly every type of
coverage, the primary reason for purchase is peace of mind. Clearly, employees are aware of
their financial fragility and are willing to take steps to protect their economic well being
through voluntary coverage.
A strong benefits package also positively affects workers’ attitudes toward their employers.
This is especially important to employers finding retention of talent a major concern. Access to
limited medical benefits makes employees much more likely to recommend their employer to others.
And while a growing number of employers are offering voluntary benefits, they tend to
underestimate the strong interest their workers have in this coverage. There are large gaps
between what employees list as “must-have” benefits compared with what employers offer,
especially for accident, critical illness andh ospital confinement insurance.
Conclusion
A strong benefits program is an essential tool for employers to compete for and keep their talented
workforce. It’s also one of the single largest expenses employers must deal with, and — no matter
what happens with health care reform legislation— that cost is likely to continue rising.
Employers who broaden their vision beyond major medical coverage to include voluntary benefits
and benefits communication will be ideally positioned to both manage the bottom line and give their
business a competitive edge. Increasingly, employers are finding voluntary benefits offer solutions to
control costs, help employees protect their financial wellbeing, and provide expanded options for a
diverse workforce.
Rather than taking a wait-and-see attitude, forward-looking employers of all sizes can take
advantage of the voluntary benefits solution today.
