Worksite voluntary benefits as we know them are dead. Driven largely by the spiraling cost increases in group health insurance, over the past decade or so employers have been shifting benefit costs to employees.

In the wake of this cost shifting, employees now expect to pay out of pocket for their benefits. As a result, today, for almost all workers, all employee benefits are voluntary benefits.

So the labels "core benefits" and "worksite voluntary benefits" are no longer useful or descriptive. This distinction between core and voluntary was based on who paid for the benefits. Now that all benefits are voluntary, it's a distinction without a difference.

Yet this outdated terminology blinds many benefits brokers and HR professionals to exactly how valuable voluntary benefits are to employees ... and how they complement and improve the core plan.

So how should employee benefit brokers and HR view the benefits formerly known as "voluntary"?

Since the terms "core" and "voluntary" no longer serve a real purpose, we'll ignore these designations and instead focus on the actual purpose - the value proposition, if you will - of these benefits for the insured, which we'll categorize as health, life and disability insurance.

Let's consider the core benefits to be group major medical insurance, dental insurance, vision insurance, group term life insurance, and group short-term and group long-term disability insurance.

Meanwhile, the most popular worksite voluntary benefits are critical illness insurance, cancer insurance, accident insurance, supplemental health insurance, permanent life insurance and short-term disability insurance.

Health insurance

* Group major medical insurance: Intended to shield employees from the financial impact of a serious illness or accident, even rich plans have lots of gaps such as deductibles and copays, as well as uncovered expenses like travel for specialty care, experimental treatment, and home nursing care.

* Critical illness insurance: Sometimes called "life insurance for people who survive," critical illness complements major medical by further protecting employees against the financial burden of a serious illness.

CI policies pay the policyholder the face amount in a lump sum upon diagnosis of a covered critical illness, including heart attack, stroke and cancer, along with other serious illnesses. Cash from a CI policy can be used to pay any out-of-pocket expenses.

* Cancer insurance: Also augments the major medical, paying the policyholder for expenses incurred as a result of cancer.

* Accident insurance: Fills more gaps in the major medical, covering the insured's out-of-pocket costs due to a wide range of injuries and accident-related expenses such as hospitalization and physical therapy.

* Supplemental health insurance: These plans fill gaps in the major medical by paying cash for such expenses as hospital confinement, in- and out-patient surgery, and diagnostic tests.

Note that all of the above are health insurance benefits that can work together to provide the employee with greater financial protection against serious injury or illness.

The other benefits improve the major medical by allowing the employee to better manage the financial risks associated with illness and accident.

Moreover, with the growing popularity and need for high-deductible health plans with deductibles of $5,000 or more, benefits such as critical illness, accident and supplemental health insurance allow the employee to insure against the glaring gap of the higher deductible.

These benefits not only strengthen the HDHP but also increase participation by reducing the financial risk of the deductible.

Life insurance

* Group term life insurance: Invaluable to the families of those employees who die while employed. Most workers, fortunately, will never need it or use it.

* Permanent life insurance: Whole and universal life are there for employees who lose their company-provided term life when they change jobs or retire. Even in the rare cases where a retiree can port the term life, the age-based premiums make the coverage unaffordable.

While group term life provides protection during the working years, permanent life offers coverage that belongs to the insured with affordable, level premiums for the life of the policy.

Permanent life complements group term life by providing retired Americans affordable life insurance that will be there for their families when they need it.

Disability insurance

* Group LTD insurance: A Godsend for employees who are unable to work for longer than six months due to an illness or injury. (Very few workers are disabled for longer than six months.)

* STD insurance: Most workers who miss work due to illness, injury or maternity are out for an average of just over two months, long enough to be financially significant to the employee but too brief to trigger LTD coverage. With a standard 180-day elimination period, LTD doesn't help the vast majority of employees.

Since 71% of Americans state they would find it difficult to meet their current financial obligations if their next paycheck were delayed for just one week, two months without income would be a severe financial hardship for most workers. Short-term disability insurance fills the gap by providing up to six months of disability income.

Short-term disability insurance complements the group LTD plan by addressing the gap created by the 180-day elimination period.

The bottom line

It no longer makes sense to segregate what in the past we have called "core benefits" and "worksite voluntary benefits." With employee contributions now required for almost all benefits, "core" and "voluntary" benefits are now best understood as simply employee benefits.

These employee benefits work together to create a nearly seamless blanket of protection for employees.

By incorporating these "voluntary" benefits into benefit plans, benefit brokers and HR departments can enhance the plans and offer employees more - and more comprehensive - financial protection.

Critical illness, cancer, accident and supplemental health insurance can improve any group medical plan, plugging holes in the plan and making it work better for employees.

Likewise, permanent life and STD insurance enhance benefit plans by filling gaps and giving employees more options for managing their financial risks.

Once they are no longer viewed as "core" and "voluntary" but simply as employee benefits, all of these valuable insurance plans become equally important tools for providing employees with the financial protection they need and deserve.

Voluntary benefits are dead. Long live voluntary benefits!

Next month, I'll explain why the "worksite" in worksite voluntary benefits is becoming as useless and meaningless as the term "voluntary" has become.


Griswold trains employee benefit brokers on cross-selling and consultative selling as president of Bottom Line Solutions, Inc. He can be reached at (615) 656-5974 or nelson@cross-sellsolutions.com.

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