Building a menu of voluntary/worksite employee benefit plans and carriers
By BenefitPlace.biz - BPTradeshow.com
BenefitPlace / BP Trade Show
One of the most common questions I receive from brokers and employers, as well as from enrollment companies, TPAS and payroll companies, is what carriers and plans to include in the menu of voluntary/worksite benefits to offer the employees in their plan design and strategy.
A look at the past
Twenty-five years ago, the "boutique" carriers could be counted on one hand and the same for the number of plans. The choices to be made by brokers, employers and employees were limited and simple. The plans were easy to understand, enrollment was on a paper application and we voluntary broker/agents worked around — not with — the brokers for the core benefits (health, dental, vision, etc.).
At an ever-increasing pace, traditional old line carriers have entered this market. The allure for carriers has been the employers' and brokers' willingness to sponsor the plans, programs and services, the employees' acceptance and participation (penetration), and the employees staying on the plans (persistence) — as well as the margins and profits. There is now a plethora of insurance and non-insurance based plans, programs and services available.
The number of brokers entering this marketplace has increased dramatically. Traditional core benefit brokers, with portfolios of existing clients, have entered the market to leverage their relationships and to replace reduced income from traditional health insurance commissions. Voluntary brokers, focused specifically on the voluntary plans and their enrollment, have been flooding this marketplace by the lure of generous commissions and renewals. According to Eastbridge Consulting, an authority on voluntary benefits:
"Overall voluntary sales were up in 2011 at $5.478 billion in premium and the largest producer segment, benefit brokers, pushed this along with increased sales. The segment generated about $3 billion in new sales, an 11 percent increase over 2010 sales. The benefit brokers' share of total voluntary sales is now at 55 percent, up from 52 percent last year." — Eastbridge Consulting Group’s 2011 U.S. Worksite/Voluntary Sales Report May 31, 2012 For the brokers as well as the enrollment companies, TPAs and payroll companies who have entered this lucrative market, the decision about which plans to offer and which carrier(s) to use has become a major question and, at times, a problem. The carriers claim to offer the best plans, programs and services in each of their market sectors. In many cases, the carrier's established brand name gives them credibility. The partial list of plans below is meant to be a starting point in the decision-making process. I recommend doing your research, performing due diligence, getting references and asking for recommendations of others in the industry.
Note: As you begin your review of plans and carriers, it is important to remember:
- Make sure the employer and their management staff fully support your efforts.
- When introducing choice to the employees in the first year, it is wise to offer a limited number of plans, programs and services until employees become acquainted with the strategy, tax ramifications, enrollment process, etc.
- Selection of an enrollment process is extremely important.
- Make sure that the voluntary plans are integrated with the core benefits.
- When possible, include the spouse in the decision-making process.
- When investigating the choices, look for guaranteed issue or simplified issue, portability, the simplicity of the claims process and the stability of premiums or costs.