High deductible health plans are becoming a way of life for many working Americans. In 2019, 52% of employers offered at least one high deductible health plan. Today, roughly one in four covered workers has an individual medical plan deductible of at least $2,000, the seventh annual Guardian Workplace Benefits Study revealed.
The high, and often unexpected, out-of-pocket medical costs are taking a toll on working Americans, particularly those in middle-to-low income households earning less than $40,000 annually. The Workplace Benefits Study revealed that three in five working Americans would have to borrow money to pay for a $3,000 medical bill, and two in five workers revealed they delayed a medical treatment, avoided an X-ray or blood test, or skipped a doctor’s visit because of the potentially high out-of-pocket medical expenses.
As more employers opt into an HDHP, benefits such as accident and disability insurance can yield positive outcomes for an employer, such as risk management and improving financial wellness among employees. In fact, we are seeing that these benefits are resulting in employers reducing their workers’ compensation claims.
This is notable. Despite a downward trend in overall workers’ comp claim frequency, claimant fraud has been on the rise the past few years among certain workforce segments. Specifically, the Workers Compensation Research Institute found that workers in HDHPs have a greater likelihood of reporting off-the-job injuries as workers’ compensation claims.
Our research showed that nearly one in five employers with an HDHP report an increase in illegitimate workers’ comp claims since 2017 — almost three times as many as those without an HDHP. And the industry sectors that were more likely to report an increase in questionable claims included hospitality (31%), government (22%), health care and social services (17%), and construction (15%).
An Actionable Strategy For Brokers
Brokers and benefits consultants have an opportunity to coordinate their services between the group benefits and risk management sides for their clients by proposing voluntary accident and disability insurance as a solution. We have seen this voluntary benefits strategy work, particularly among industries with higher-than-normal workers’ comp frequency and costs.
To provide context, our research showed that 46% of employers reported a decline in workers’ compensation claims after offering accident or short-term disability insurance — 42% reported declines of 50% or more, while another 22% cited declines between 25% to 49%. More specifically, one in four employers experienced a decline in workers’ compensation claims after offering voluntary accident insurance, and one in eight experienced a decline after offering short-term disability insurance.
This alone makes it worthwhile for brokers and benefits consultants to consider proposing an actionable strategy for clients who need help reducing questionable workers’ comp claims. By facilitating a risk transfer, it will help a client address a challenge and drive down costs. But for brokers and benefits consultants, it also will help your firm drive supplemental health growth, increase client lifetime value, and reduce the impact of lost workers’ comp revenue in states where workers’ comp premium rates have decreased.
So what should you be thinking about? How can you help your client reduce their workers’ comp claims?
» Income protection with short-term disability insurance. Guardian’s research found that Americans with disability insurance are most likely to acquire it via their employer (93%) versus on their own (7%). This poses an opportunity for brokers to educate employers about the value of short-term disability insurance, which replaces a portion of an employee’s income if they are too sick or too hurt to work due to a covered illness or injury.
We also recommend having a conversation with employers about a holistic, integrated plan that includes not only disability but absence management as well. This integration ensures that the company has a plan in place for how they manage an employee’s leave, coupled with a return-to-work plan.
» Offer accident insurance to help cover medical expenses. Whether it is voluntary or fully employer funded, accident insurance can help an employer’s workforce fill the medical gaps created by HDHPs. It is also the most affordable of all the supplemental health benefits and easy to understand.
If an employee has an accident, they receive a lump sum cash benefit to help offset the medical costs associated with the treatment of the accident. Most important, it helps employees deal with unexpected circumstances that require medical attention and not have to worry about how they will pay for the additional expenses.
» Educate employees. Employees need to understand what their employer is offering them and how it helps increase their financial wellness. Simply put, how does the benefit help them financially?
In the case of accident insurance, key points to cover when educating a workforce about accident insurance include off-job accident product benefits; ease of filing an off-job accident claim; benefit payout time frame and cash benefit is paid directly to the employee, not to the provider, among others. In the case of short-term disability, most employees don’t understand it serves as income protection for either an injury or illness. And let’s face it, the name alone causes confusion among employees. As a result, a defined communications and engagement strategy is critical.
Along with effective communication and training for employees and their managers, accident and short-term disability benefits offer several advantages as part of an overall risk management strategy. They can quickly address questionable workers’ comp claims, improve workforce health productivity and help reduce employee financial stress and anxiety. These are all critical in helping a company meet the needs of its workforce while contributing to cost containment.
Today’s employers are facing numerous challenges. Whether it’s reducing workers’ comp claims, controlling costs or recruiting talent, effective benefits strategies are paramount to their success.
We found that employers who made voluntary benefits an important part of their overall risk management strategy reported better results. They reduced workers’ compensation claims (29%) compared with those without a well-defined voluntary benefits strategy (14%). Most important, employers paying all or part of the cost for an accident or short-term disability are likely to see even greater results, since a larger proportion of the workforce will own the coverage. The time is now for brokers and benefits consultants to consider a risk transfer strategy that is a win-win for both the employer and the employee.