Employers turn to voluntary benefits to rein in health care costs

CARMEL, Ind., March 1, 2023 /PRNewswire/ -- Optavise released a new report, The 2023 Benefits Broker: Rising Healthcare Costs and Increasing Competition Set the Tone. The seventh annual report found brokers are adding innovative products and services due to various market forces, which include rising healthcare costs (81%), competition from other brokers (50%), and increased demand for price transparency (48%).

As employers refocus on recruiting and retention while juggling inflationary pressures and rising healthcare costs, they are relying even more heavily on their brokers for help identifying meaningful and cost-effective products and services. In fact, 83% of brokers reported that clients rely on them to contain healthcare costs and 60% of brokers reported that employers rely on them to identify products and programs to meet evolving employee needs.

New benefits offerings focus on financial concerns
Sixty-four percent of brokers saw an increase in clients adding voluntary benefits, up from 58% in 2021. The top three most added benefits remained the same from 2022: accident insurance (71%), critical illness (68%), and hospital indemnity (39%). Employees and employers seem to be increasingly focused on income protection: respondents reported that interest in disability almost doubled (from 18% to 34%) and life insurance tripled (30% combined for group and whole life, up from 10%), while pet insurance (19%, down from 28%), ID theft (13%, down from 20%) and legal protection (11%, down from 20%) all saw declines as compared to the 2022 survey.

"Employers continue to broaden their standard offerings with voluntary coverage to remain competitive, fill the gap with their benefits package, and provide an additional source of financial stability for the employees," says Kim Buckey, vice president of client services at Optavise. "Some of these programs cater to underserved employee groups and those with specific health conditions, including programs focused on LGBTQ+ employees, fertility, or chronic condition management support."

Communication remains critical
Beyond creating comprehensive and attractive benefits packages, employers are tapping brokers to communicate benefits information to employees. Ninety-three percent of brokers reported seeing moderate to high demand for help with benefits communications materials, and 66% agreed that offering communication services brings a lot of value to their business. To accommodate today's increasingly hybrid workforce, brokers are offering support both in-person (75%, up from 54% in 2022) and virtually (65%, up from 56% in 2022). Seventy-seven percent of brokers are also providing materials to help educate employees about their benefits options year-round (up from 59% last year).

"As employers add more programs, employee demographics and worksites shift, and inflation becomes more of a concern, brokers have a major opportunity to teach employees how to make more cost-conscious, informed decisions when it comes to choosing and using their benefits," Buckey noted.

Lessening HR teams' burden through benefits technology/administration
Employers rely on their benefits administration partner to help assure compliance, contain costs, and personalize the employee experience. Finding the right fit appears to be problematic: 56% of brokers said they recommend benefits administration partners to clients annually (compared to 48% in 2022) with the biggest challenges to implementing the proposed timeline (70%), complex file feeds (58%), and the availability of on-going support (65%) and administrative training (59%--almost double the response from the 2022 survey). When asked about the top three features clients want in their benefits administration system, brokers said ease of use (75%), API/third-party integration (47%), and single sign-on (41%).

"Employers are truly looking for a system that will make their lives easier," said Buckey. "As HR teams continue to feel the effects of the Great Resignation, they need a benefits administration platform that provides high-touch, expert service to improve productivity and simplify the benefits experience for both HR teams and their employees."

To learn more about how brokers are assessing clients' benefits offerings, identifying alternate products and services to manage costs, and managing compliance and reporting, download the report here.

Methodology
Optavise surveyed more than 100 U.S. based health insurance brokers, representing the top 20 largest insurance brokerage firms on three main areas: their current service offerings, which services deliver the most business value, and how their models are likely to evolve to help them compete in the coming year. Participating brokers work for a mix of mid to large-sized clients: 78% said they have 20 or fewer clients with more than 500 employees, while 14% said they have more than 20 clients with 1,000+ employees. The survey was conducted from November 2022 to January 2023.

For more information, visit Optavise.com.