Many Americans are struggling with high out-of-pocket costs for health care.
By Cyril Tuohy
An index measuring the confidence of insurance carriers, brokers and advisors serving the voluntary benefits industry hit a record of 102.9 at the end of last year, up 3.9 points from year-end 2012, a new survey found.
Eastbridge Consulting Group, which conducted the survey said it is the highest score recorded since the company completed its first voluntary benefits survey in December 2005.
“Despite all the changes we’ve seen due to health care reform and the thrust into private exchanges, the majority of key players in the industry – carriers and brokers are still optimistic about the voluntary industry,” Bonnie Brazzell, Eastbridge vice president, said in a statement.
The index is calculated using three expectation measures: sales growth, profitability and enthusiasm for voluntary benefits products among employees.
Despite flat profitability measures, Eastbridge said sales growth and employee enthusiasm showed gains in the 2013 survey.
The confidence index found that 94 percent of survey respondents believe sales of voluntary benefits will increase in the next 12 months, up from 90 percent at year-end 2012, according to Eastbridge.
Voluntary benefits are paid for entirely by the employee through a payroll deduction. The benefits are offered in addition to shared benefits, benefits for which the employer and the employee contribute to premiums.
The total amount of the shared contribution has gone up over the past 10 years with the rising cost of benefits.
Last year, average annual health premiums for family coverage came to $16,351, according to the Kaiser Family Foundation and the Health Research & Education Trust (HRET).
Of the $16,351 in average health premiums for family coverage, the employer picked up $11,786, or 72 percent of the total cost, and the employee paid the rest, according to Kaiser/HRET. Some companies pay more, but many pay less as they shift more of the total cost onto employees.
Employers find voluntary benefits attractive because they don’t contribute to premiums. At the same time, offering the benefits helps to retain employees.
Employees like the benefits as they allow employees to supplement coverage they already have, and they can buy the coverage at a lower price through group rates. Group rates negotiated by the employer are lower than similar coverage in the individual market.
Benefits brokers and advisors like to sell voluntary benefits because they provide a new revenue stream, especially with thinner profit margins on the employer-paid side of the benefits equation.
Examples of employee-pay-all benefits are vision, dental, accident, supplemental medical coverage, medical indemnity, critical illness, cancer, long-term disability and term life. Term life insurance is the most popular voluntary benefit.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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