Moving Benefit Choice Away From Autopilot

By Cyril Tuohy

InsuranceNewsNet

For tens of millions of employees, choosing employer-sponsored health benefits was the equivalent of hitting the “autopilot” button.

Workers would choose from two or three plans, maybe more if they worked for a large employer. A smattering of “less important” benefits -- short-term disability or life insurance, for example -- might have been optional.

By and large, the benefits enrollment model was static. Choices among benefit plans and within a single plan itself were very limited. Pricing was dictated by the rate negotiated by the employer and a carrier.

Enrollment processes surrounding employer-sponsored benefits were a relic of the 1970s, with fall open enrollment dates lasting from October through December, and benefits communications packages often running more than 20 or 30 pages.

For employees with chronic health conditions, their benefits plan was even more important than their salary. Ironically, though, few employees bothered to read their benefits entitlement from cover to cover.

With group rates so much lower than individual rates, employees were left with no alternative as there was no alternative. As a result, employees signed up for the same group benefits year after year, resigned to an onslaught of higher, deductibles, copays and coinsurance.

But over the past few years, this model appears to be showing its age with many employees not always satisfied with the enrollment process regarding their employer-sponsored benefits.

Like Arctic ice cracking, buckling and shifting with the spring thaw, fissures affecting the benefits model grow deeper, as they have been for some time.

Could the market be seeing the beginnings of a more dynamic model, one in which employees will finally have more flexibility over choice, coverage and price?

Surveys indicate that employers and employees value employer benefits, so the employer-sponsored benefits are here to stay in the short to medium term.

The correlation between the satisfaction of the benefits package and the employer remains strong, but employee ratings of their workplaces and benefits offerings are at their lowest levels since 2008, a Unum survey found.

It is the lowest rating of benefits in six years of conducting the research, Unum also said.

Only half (49 percent) of U.S. workers rated their employer as an excellent or very good place to work. Less than half (47 percent) of employees who were offered benefits by their employer rated their benefits as excellent or very good, the research found.

The online survey polled 3,031 adults 18 or older. Of those 3,031 adults, 1,521 were either working full or part-time or were self-employed.

Employers say they like offering benefits because benefits act as a recruiting and employee retention tool. Employees like the convenience of their employer-sponsored benefits, and benefit from group pricing. Both sides gain from the deal.

Last month, Mercer announced the launch of Mercer BenefitsCentral, which Mercer termed a “newly designed digital experience” for large market benefits administration.

Sandy McCarthy, Mercer’s U.S. Benefits Administration leader, said in a news release that the initiative’s “consumer-focused design and mobile-oriented functionality,” will push employees to become “active managers” of their own benefits.

McCarthy said employees stand to benefit from an injection of retail features and tools designed to offer employees more personalization. Tools offered by BenefitsCentral include shopping cart technology, cost and feature comparison tools and advanced decision-support algorithms.

Mercer competitors AonHewitt, Buck Consultants and Towers Watson aren’t standing still either, and many plan design experts at these companies are pushing similar changes to the employer-sponsored benefits model.

Private health insurance exchanges have helped bring new retail-oriented technologies into the market, ushering in very different purchasing and enrollment experience.

Richard Shaffer, vice president of enrollment at Colonial Life, a Unum subsidiary, said in a news release that a new generation of technology around benefits enrollment is changing the way employees buy employer-based coverage.

The changes mean employers have an opportunity to help employees obtain the protection they need “by presenting and structuring benefit choices in ways consumers best receive them and making benefit recommendations and advice available to employees on-line and offline,” he said.

Colonial Life’s latest research on more effective benefits enrollment is outlined in a white paper issued titled “Building a Better Benefits Enrollment: Using Consumer Behavior to Create a More Effective Enrollment.”

Cyril Tuohy is senior writer for InsuranceNewsNet. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].