Shawn Ferguson knows voluntary benefits, and it starts with a nearly tragic car accident in college that almost took his life. His medical care was covered, but importantly his mother had an accident insurance plan that paid him after he got out of the hospital.
"That was a pivotal point in my life because it saved me financially," he said. "It is what sparked my interest in this industry."
Ferguson graduated with National Honors from the University of Akron in 2004 with a Bachelors in International Business. He's been in the voluntary benefits field ever since, doing everything from enroller to case manager to broker. Ferguson owned Bayside Benefit Solutions for three years before becoming Alltrust's Voluntary Benefits Specialist a year ago, helping create the firm's Worksite Division.
Personally and professionally, Ferguson understands that healthy employees are necessary to a vibrant business, but skyrocketing healthcare costs make the benefits harder for employers to afford and compete for the best workers.
A growing trend to overcome this quandary is the use of voluntary benefits. Here are five insights into how voluntary benefits help your organization.
1) Why are voluntary benefits becoming so important for employers? Voluntary benefits help fill the gaps created by rising deductibles and out-of-pocket maximums with major medical health insurance. Average annual premiums are more than $16,800 per family now, according to the National Conference of State Legislatures. More employers are leveraging voluntary benefits to help cover that cost. The most prevalent voluntary plans used to cover these costs are accident, hospital and critical illness.
2) What are some of the gaps that traditional benefits do not cover, and in which voluntary benefits play a role? Almost everyone has deductibles now, and those are on the increase. A Mercer study in 2014 found that 23% of employees choose high-deductible plans — an increase from 18% over just one year. For example, say someone in your company faces hospitalization for a child. They will need to meet their deductible, which can be in the thousands of dollars, before the plan begins to provide coverage. If your company offers hospital coverage as a voluntary benefit, the monetary benefit in the event of a claim is paid directly to the employee, who then uses it to cover the deductible and anything beyond the insurance maximums. Employees get the coverage at a group rate and they are usually guaranteed issue policies that can be customizable down to the individual employee.
3) What do voluntary benefits do for employers in the competitive arena? Voluntary benefits help employers retain and attract great employees by enhancing benefit packages at no cost — or maybe even a cost-savings. Most employers now are offering these in some way, and those that do not are at an increasing disadvantage in competing for employees.
4) How is it possible that voluntary benefits provide both employees and employers with a win? With these plans, cost savings come to the employer through payroll taxes. Employees are able to use pre-tax dollars to pay the premiums, which saves them on their tax bills, while employers save money by not having to match FICA withholdings for Social Security and Medicare. Further, the voluntary benefit covering accidents offers an extra level of protection for employees and can work to reduce employer exposure to workers comp claims. Employers should want to see a lot of participation.
5) What is the impact on the employer-employee relationship? In addition to the cost savings, from a company viewpoint, the voluntary benefits allow employers to enhance their benefit package at no hard cost. Employers are able to enhance their relationship with employees by providing coverages that they may not be able to afford or be eligible for outside of the workplace. Importantly, this often ends up solving a major problem or worry for employees.