There are seismic shifts happening in the benefits industry today, creating tremendous opportunity that will not be seen again in this lifetime, said a speaker at the 7th annual Employee Benefit Adviser Summit.

Those changes are coming as employers shift more of their health plan costs to employees through high-deductible plans. This opens the way for advisers to sell the employers on voluntary products they can offer to their employees, said Chris Hill, CEO of benefits technology provider Spotlite. Such products include accident, critical illness and hospital indemnity insurance.

"For those advisers who can embrace that change, there is an opportunity to create a lead over competitors," he said to a room full of brokers and advisers. "Winners will be created. Losers will be created. It's on everyone to think, 'How will I capitalize on this opportunity?'"

The employer-centric model of buying health care insurance for employees puts the United States in the minority. It started during World War II. During the war, companies couldn't slow down production, but had a hard time hiring in a labor market depleted by troops sent overseas. As Hill observed, "The government stepped in and set wage controls ... so companies said, 'What else can we provide?' Fringe benefits."

And now, Hill says health care costs are getting out of control. In 2005, the average premium for a family plan was just under $11,000, he says. That jumped to just over $15,000 in 2011, and Hill estimates it will be nearly $30,000 in 2021. "That's huge, that's not sustainable, so how will employers cover these costs?" he asked.

It becomes harder for companies to hold on to employees and hire new ones when health care costs are that substantial.


Meeting the need

That's why employees turn to voluntary benefits, which they typically must pay for themselves, to fill the void. "When [an] employer wants to shift cost, HR can't come in and say, 'Deal with those expenses.' They need to keep their employees happy, to attract new employees," Hill said. "The demand [for voluntary] is logical. ... There are a lot of expenses not covered and voluntary benefits address that gap."

It's one of the few things that can be controlled in this world of shifting costs, he added. It is advantageous, Hill said, for the employee to buy such supplemental benefits through an employer, who can provide a lower rate as a group, often at guaranteed issue and with portability. He pointed to an example of a Starbucks employee who enrolled through his employer on Spotlite, and his coverage remained the same for nearly half the price. According to Hill, in 2011, group sales of voluntary products increased 15%, while individual sales decreased 6%, "showing the power" of group sales.

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