High-deductible plans have created a gap in coverage for many employees. Voluntary benefits increasingly bridge that gap.
They call it “the gap.”
That's when high-deductible and limited-coverage health insurance plans create a gap in coverage — often times a difficult financial gap for employees to bridge.
This has created an opportunity for employers. They can help bridge the gap with voluntary insurance products.
The cost for these products is generally small, especially when compared to the cost of traditional health insurance plans. But they can pay big dividends. A study by MetLife found that employees who are satisfied with their benefits package are twice as likely to be satisfied with their jobs. Indeed, many employers have these voluntary insurance products to be effective tools attracting and retaining key employees.
Knowing what to offer and how to offer them can be difficult to determine. Many progressive employee benefit companies have created voluntary divisions, staffed with work site experts who can help employers navigate the comprehensive voluntary products menu. Here are some popular voluntary products offered today and insights on when and how to use them, according to the National Association of Health Underwriters.
1. Life Insurance Life insurance is by far the most popular voluntary product. Group term-life provides life insurance to all employees without a health screening and usually gives the option for the employee to buy coverage for a spouse and children.
Today, more employers are bundling life insurance with other voluntary products, such as disability coverage or long-term care policies.
Some employers also might offer individual term life, whole life or even universal life policies. These plans may require a health screening. However, more and more carriers today are offering these plans without medical underwriting.
2. Cancer insurance Treating cancer typically is expensive and often entails travel, missed work and experimental treatment not always covered by health insurance. Cancer plans can pay up-front benefits upon diagnosis as well as additional benefits for treatment.
3. Critical-illness insurance Like cancer insurance, critical-illness insurance pays a lump sum upon diagnosis of covered events, such as some forms of cancer, kidney failure, heart attack (stroke and major organ transplant are typically standard in these plans).
These policies don't insure against the events happening, but they give employees peace of mind by providing some financial security in the event they do occur. Additionally, many carriers offer critical illness policies without medical underwriting.
4. Disability income insurance When employees can't work, there is no paycheck. Disability income insurance closes that gap. According to the National Association of Health Underwriters, “Disability income coverage is perhaps the most important insurance a person can have after a good major medical policy.” The Association encourages employers to consider carefully their goals when offering disability income insurance. Voluntary disability is often offered without medical underwriting.
5. Long-term care coverage These products provide coverage for individuals who need custodial care in a rehabilitation facility, nursing facility or even at home. Typically, these policies reimburse policyholders a daily amount for such living services as bathing, dressing or eating. Because younger workers rarely need these services, long-term care coverage is often available as a benefit employers can offer at a low cost.
6. Accident coverage Designed as a supplement to health coverage, accident coverage is rising in popularity as a means to offset rising deductibles for emergency room visits. Plans often pay policyholders a lump sum to help offset the cost of care due to a covered accident.
These payments have maximum amounts depending on the incident of care. In many cases, an insured will receive benefits totaling more than their out-of-pocket medical expenses. This additional money can be used for other financial burdens while recovering.
7. Dental and vision Long offered by a wide range of companies, these products are taking more importance as a means for keeping employees satisfied in the evolving health-insurance landscape.
Writing for Human Resource Executive Online, Carol Harnett advised companies to look for benefit advisers with plenty of voluntary product experience.
For employers who want to assist their employees with the cost of healthcare and who seek a competitive edge in hiring, voluntary products have become an effective resource.