When voluntary products, such as critical illness, accident and cancer insurance, were first introduced through employers, only a small percentage of employees had a need for those products, as $5 co-pays and low deductibles reigned supreme. Now, with out-of-pocket costs continuing to rise, there is a push to make worksite work for a larger segment of the market.
Speaking recently at EBA’s Workplace Benefits Renaissance in New Orleans, Scott Mardis, territory manager at Kemper Benefits in Philadelphia, explained that 85% of health insurance claims are $2,500 and under, 7-out-of-10 employees have less than $1,000 in their savings accounts and many consumer-driven health plans have deductibles as high as $5,000.
As a result, group plans “simply do not work for employees,” Mardis said. “Most voluntary benefit plans are designed to cover the 10%-15% of the population that experience high claims, leaving the 85% without significant coverage and deductibles they cannot afford.”
‘A solution sale’
Voluntary at its core must address an employee’s underlying medical exposure: the deductible, he explained. “Most voluntary plans cover a small percentage of employees who experience catastrophic events, but do not address most expenses incurred when an employee accesses care under their deductible,” he added.
It is a broker’s role to consult with an employer and explain that exploring voluntary offerings needs to start with examining the capabilities and limitations of the underlying medical plan. “Voluntary should be a solution sale. Not a product sale,” Mardis said.
“Brokers are the financial steward of their employer’s healthcare dollar,” he added. “Continuing to spend that money only on one monolithic health insurance plan is inefficient.”
As brokers help their clients to build more strategic coverage, they should be redirecting some of the savings garnered from the process to be invested in an employer-paid plan that covers a higher percentage of employees, he said.
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