Alert advisors who are on top of the most recent headlines undoubtedly have noticed big changes and more options to employer-sponsored benefit plans.
It’s no accident.
Employers are tinkering with changes to the benefit mix as the Affordable Care Act (ACA) imposes some uniformity on employer-sponsored health benefits, eliminating differentiation among medical plans.
Meredith Ryan-Reid, senior vice president and head of accident, health and worksite benefits for MetLife, said that the uniformity among plans is resulting in employers becoming more creative to round out the benefits portfolio.
In the past many employers declined to offer supplemental benefits and pointed to the robustness of their major medical and primary health care coverage, Ryan-Reid told InsuranceNewsNet.
But that approach has changed with the introduction of consumer-directed health plans and the 2018 excise tax, which will penalize companies that offer “Cadillac” coverage.
“The fact that we have another deadline with ACA for employers to avoid the Cadillac tax will force employers to look at benefits outside major medical and primary health care,” Ryan-Reid said.
That’s why the most progressive employers have started to introduce supplemental insurance benefits — from cancer and critical illness coverage, to short and long-term disability to hospital indemnity, to wellness programs and even identity theft protection.
Companies that get right the benefit mix see higher worker retention numbers and higher rates of satisfaction among employees, according to MetLife’s 13th Annual U.S. Employees Benefit Trends Study released earlier this year.
The survey found that among employers offering between 11 and 20 benefits, 66 percent of employees would recommend their organization as a great place to work. That percentage drops steadily as fewer benefits are offered.
Among companies offering no benefits, only 46 percent of employees would recommend the company as a great place to work.
The correlation between benefit choices and employee satisfaction is well documented. But with new ACA rules, employers want to offer other ways to spice up their benefits packages. This is because they know that the stronger the benefits package, the more power employers have to retain workers in an improving economy and a tightening employment market.
Employees value employer-sponsored benefit programs and the vast majority of large employers said they will continue offering them, according to a survey published by Mercer last year.
Ryan-Reid said the “ACA has created a lot of pain for many of us in the industry, but has created a lot of discussion and education around benefits.” In addition, she said, employees expect more choices “no matter what they are buying.”
“People like choices but they also like recommendations,” she said, and that means more decision-support tools and communication techniques.
One area outside of the major medical coverage and protection benefits typically offered by companies is wellness programs. Employers appear to be expanding the definition of what wellness programs entail.
Wellness programs traditionally have been offered to improve workers’ physical and mental well-being. But companies are looking to add a financial component to wellness as employees find it difficult to juggle cash flows and set aside money in liquid savings.
Brian Cosgray, cofounder and CEO of bill-pay software company DoubleNet Pay, said any financial advice offered through employer-sponsored programs usually is dispensed in the context of retirement planning.
But hardship withdrawals from 401(k) accounts signal that employees need help with cash management and cash flow.
“The financial advisor has traditionally been focused on retirement planning and asset allocation, once an employee has enough money in that account,” Cosgray said. “But that’s not cash management, which is necessary to build up a retirement account in the first place. That’s where we saw the missing piece.”
Cash flow squeezes often are related to paying for health care in an era of rising deductibles and higher copayments imposed by consumer-directed health care models. Surveys indicate many families in the U.S. would have trouble coming up with $2,500 to pay for an immediate medical expense.
Cosgray said that while large employers have a different mix of employees than are found in smaller or midsize companies, there are cash flow issues in every economic demographic.
“One-third of people making over $100,000 a year are living paycheck to paycheck and 72 percent of all millennials are living paycheck to paycheck,” he said.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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