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Welcome to the LMC Blog

Voluntary benefits are in demand

1/25/2018

 
Salary, health benefits, and retirement savings plans are still the most important parts of employees’ overall compensation. However, concerns about health care costs not covered by health insurance and anxiety over unexpected expenses have employees looking at the range of voluntary benefits that can provide them with added security to meet these financial uncertainties.

Voluntary benefits are a set of insurance products that can help fill in gaps in coverage. While it’s easy to overlook these gaps, doing so could result in financial hardship.
A study published in JAMA Internal Medicine indicates the average American is shouldering an increasingly higher out-of-pocket expense for hospital stays. Between 2009 and 2013, overall health-care spending grew at 2.9 percent per year, while the amount shouldered by insured patients when they were hospitalized grew more than twice as fast.

Patients' out-of-pocket portion of their hospitalization costs rose 6.5 percent each year, from $738 on average in 2009 to more than $1,000 in 2013. To put that in perspective, consider the findings of a recent Federal Reserve survey, which found nearly half of Americans do not have enough money to cover a $400 emergency expense.

This means a car accident or an unexpected illness such as pneumonia could result in a lengthy hospital stay and that could result in financial hardship, even if that person is covered by health insurance.

For a low monthly or bi-monthly payment, an employee who elects voluntary hospital indemnity insurance can avoid these expenses. As with other kinds of voluntary insurance, affordable premiums and the potential to prevent major financial hardship are part of the attraction.

Not everyone will want to sign up for hospital indemnity insurance or any of the other voluntary benefits a company might offer, and that's OK. The option for coverage exists so that employees can customize the coverage to suit their individual lifestyle.

As the demand and marketplace for voluntary benefits have grown, employers have taken notice and are benefiting too.
  • Low cost for employees; no cost for employers: Voluntary benefits are paid for by the employee, allowing the employer to expand their employee benefits program without additional cost.
  • Competitive advantage: A LIMRA study found that seven out of ten employers offer voluntary benefits for existing employees as a way to attract and retain talent. As more employees look to the overall compensation to make their decision, a benefit program with a wide range of voluntary options is an easy and cost-effective way to offer more.
  • Healthier, happier employees: Offering a range of low-cost insurance options can help alleviate many of the "what if..." scenarios that cause employees a good deal of financial stress. This can lead to healthier, happier, and more loyal employees.

Organizations are increasingly offering voluntary benefits as part of their recruitment and retention strategy. And for good reason – like good health insurance and a comfortable salary, voluntary benefits help employees feel valued so they can flourish at work.

Source: Quintana, Joseph, Reliance Standard

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