Also in this issue:
Speed vs. Innovation
Spring Quiz
Lost Ground in 2010
Winter Quiz Winner
Will Employer-Sponsored Benefits Survive?
Enrollment Methodology and Participation
Field Structures for Voluntary Carriers
Can You PASS the Broker Test?
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Will Employer-Sponsored Benefits Survive?
One of the most frequent
questions we have received over the last few months is our opinion
on the future of employer-based benefits and, more specifically,
the future viability of voluntary benefits. We remain convinced
that the employer will remain the primary “delivery vehicle”
for serving the insurance needs of the vast majority of individuals.
Yes, some employers (primarily the small ones) may stop offering healthcare benefits, sending their employees instead to the healthcare exchanges. But we don’t think the majority will. Even those who do will still have to compete for employees, and employees like buying benefits at work. Employees believe this offers significant advantages. As the job market heats up, the pressure to have a large variety of high-quality insurance coverages and non-insurance benefits will once again be a major factor for employers.
The advantages that employees see with voluntary benefits include the payroll deduction feature, de facto budgeting, simplicity, and the belief that the employer and the broker have already vetted the providers and policies. These beliefs should equate to employers continuing to offer voluntary benefits and payroll deduction continuing to be the primary mode of premium payment. Offered the option to not payroll deduct, many employers may be tempted, but the reality is that employees prefer payroll deduction. Benefits offered through individual payment modes (ACH, credit card, and debit cards) – even if offered at work – don’t get the same acceptance rates by employees. While we expect there will be more experimentation with alternative modes, we think that payroll deduction will survive as the main mode.
The employer’s world is simplified as a result. Benefits are still offered, but now they are offered on a defined-contribution basis. Benefits have finally become controllable costs.
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