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Most U.S. workers live paycheck to paycheck, which means health care emergencies represent a significant financial burden.
Many employers now offer high-deductible health plans, where annual deductibles and co-insurance could be as high as $9,000 for individuals and $15,000 for families. But the median savings for individuals earning between $45,000 and $70,000 a year is only about $2,200. If people incur a serious diagnosis like cancer or heart disease, or have a major accident or prolonged hospitalization, they can quickly find themselves in financial distress. Many have turned to crowdfunding sites to close the gap, and more than 250,000 GoFundMe pages have been started to help people pay for medical expenses.
Protecting your workforce from facing these kinds of financial difficulties and stress should be a high priority for employers.
Voluntary benefits, also known as supplemental benefits, can offer employees financial protection from high medical costs while ensuring they have access to the medical care they need. But for many employees already facing high health care premiums, paying even a few dollars extra a week for “voluntary” benefits can be a stretch. So how do employers help employees see the value of these extra protections?
Here’s how employers can encourage employees to enroll in voluntary benefits and ensure that they are financially protected.
One of the easiest things an employer can do is bundle the three most important voluntary benefits — critical illness, accident and hospital indemnity — for employees at the point of medical plan election.
These three voluntary health plans cover employees against the major risks for high medical costs. Critical illness insurance covers people with cancer, heart attack, stroke and other major illnesses. Accident insurance covers individuals in the event of a major accident, such as a car accident, breaking a leg or tearing an ACL. Hospital indemnity insurance covers employees in the event of prolonged hospitalizations. Combined, these three products offset any exposure to major medical costs an employee could incur.
By bundling these benefits in a cohesive and sequenced way, employers can help employees see their value and protect their financial well-being more easily. For example, if an employee participates in a high-deductible health plan with a $12,000 out-of-pocket exposure, offering these supplemental health products that help offset that financial exposure at the point of medical plan election helps connect the dots for employees between their financial exposure and the protection the voluntary benefits offer.
When offered this way, we see much higher participation in these products because it makes it apparent that individuals can insure their risk for pennies on the dollar.
Employers that offer high-deductible health plans can also provide company-paid critical-illness plans to help protect employees from the high costs of a prolonged illness or a complex medical condition.
Many employers will use this approach as a way to encourage employees to enroll in higher deductible plans with lower premiums. For example, if an employee participates in a high-deductible plan, they may get $3,000 to $5,000 in critical illness coverage from a voluntary benefit provider paid for by their employer. It saves employees money when it comes to their premiums but also helps protect them from the financial burden of those high deductibles in the event they incur a critical illness.
The financial distress caused by high medical bills can lead to disruptions at work and less productivity for workers. Offering this paid benefit can help employees protect their financial well-being and reduce problems due to absenteeism and financial stress.
More and more companies are adopting high-deductible plans, but few people have access to the financial reserves they need to cover their financial exposure under these plans. For employers, offering company-paid voluntary benefits is becoming increasingly less of a "voluntary" benefit if they want to ensure that productivity and moral don’t suffer because of financial distress and want to create less financially risky employees’ health benefits.
Companies may also need to address biases that employees may have about voluntary benefits. Some people equate these options with the types of plans offered by commissioned salespeople offering more protection than people really need.
These benefits are often very defined, providing $10,000 to $15,000 of coverage at a low cost of $2 to $3 a week. And they are usually offered in a non-sales environment by either a self-service platform or by non-commissioned W-2 employees.
It’s important to educate employees about the misconceptions surrounding voluntary benefits to help them reap the benefits of these plans and protect them in the event of a prolonged illness, accident or hospitalization.