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The voluntary benefits marketplace has evolved significantly over the years, and the rate of change promises to increase as employers continue to try to attract and retain employees at a reasonable cost. New product and service offerings, along with a growing distribution system of brokers and consultants, will ensure a dynamic and expanding universe of value-added options.
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What are voluntary benefit plans?
Also known under the worksite-marketing description, they are made available to employees as a “voluntary” option through an employer-sponsored plan. Employees who decide to purchase these products usually pay 100% of the premium through regular payroll deductions.
When were they introduced?
As far back as the 1950s when they were originally called payroll-deduction or salary savings plans – monikers that reflected the out-of-pocket nature of these insurance and investment products made available through the workplace.
What types of organizations provide products/services or act as a resource?
Traditional carriers offer a host of insurance products, while a growing number of non-insurance providers specialize in discounts on products or services that do not require medical underwriting. Numerous third-party administrators provide enrollment, billing and technology services. Consultants such as LIMRA International and Eastbridge Consulting Group Inc. conduct extensive research. Trade associations include the Benefits Marketing Association, Mass Marketing Insurance Institute, known as MI2, and the Voluntary Employee Benefits Board, known as VEBB.
What are the most popular types of products or services?
While life insurance is often cited as the most popular voluntary benefit plan, specialized medical coverage such as critical-illness or cancer insurance is seen as among the fastest-growing category. Both short- and long-term disability plans also play a significant role. Recently, the voluntary benefits universe has been expanded to include products and services such as health-related discount products, pet care, legal plans, travel services, and mortgage programs, which don't require any medical underwriting.
What are the key differences between the individual vs. group market?
Employers can leverage their buying power to negotiate product and service discounts on behalf of their workforce based on group rates, though the lines between voluntary benefit plans offered on an individual vs. group basis have blurred as seen with the emergence of “hybrid” products that borrow key features from one another.
What is their role in today’s employee benefits marketplace?
Voluntary benefits help employers round out employee benefit offerings amid cutbacks in company-paid core health care and other benefits due to the increasing cost pressures. These optional benefits can serve as value-added tools to help attract and retain top talent.
Do employers have fiduciary responsibilities associated with these plans?
Although most employers do not contribute to the cost of this coverage, they still have a fiduciary responsibility under ERISA to police such plans if they engage in the promotion or distribution of benefits information related to these programs or allow payroll-deducted payment on a pretax basis through a Section 125 cafeteria-style plan.
What do employees generally think about voluntary benefits?
A 2005 study by LIMRA International found that more than 60% of 2,000 employees surveyed consider the availability of voluntary or supplemental benefit options at least somewhat important. The driving factors behind these purchases were convenience of payroll deduction and price.
What are the latest sales figures involving voluntary benefits?
Eastbridge Consulting estimated worksite sales of life and health products paid by the employees through payroll deduction to be $4.3 billion in 2005, 3.4% higher than the previous year. Inforce premiums, which rose by about 7%, brought the total inforce sales figure to between $13.4 billion and $17.7 billion based on the performance of 60 worksite-marketing carriers whose sales the consultant pegged at 85% of worksite sales volume in 2005.
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• See Industry Overview
• See Insurance Products Overview
• See Non-Insurance Products Overview
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