The growing influence of voluntary products is rapidly extending in the private exchange arena, with both Aon Hewitt and Sun Life Financial announcing recently they will offer voluntary products through their health care exchanges.
Referred to as “elective benefits” on the Aon Active Health Exchange, beginning Jan. 1, 2015, critical illness, accident, hospital indemnity, life, long-term disability, identity theft, legal, home/auto and pet insurance will be available.
Aon’s National Health Exchange Strategy Leader Ken Sperling says that employers on the company’s platform were asking for these services to be included. “They were looking for a portal to expand benefits and other voluntary [products],” he says.
Sun Life will offer voluntary short-term disability, long-term disability and accident insurance through Liazon, which operates its exchange platform. Sun Life already uses Liazon’s exchange platform to offer voluntary life/accidental death and dismemberment, and critical illness/cancer insurance.
Commissions
As far as broker commissions are concerned, Sun Life doesn’t anticipate any changes.
“Employers are grappling with a suite of options available to them, along with a sweep of regulatory changes and the ACA,” says Karen White, AVP, product initiatives, specialty business at Sun Life Financial. “I don’t see the role of the broker being displaced primarily because the role of the exchange is one avenue in their total rewards. Brokers are needed to advise employers on and off an exchange.”
White believes the role of brokers will morph as employers face new challenges. Brokers will learn how to position voluntary products in conjunction with medical. Especially with the rise in uptake of consumer-driven health plans, brokers can deftly position voluntary products to fill in those gaps and present employers and their workers with a holistic picture.
“We’re going to see the world of brokers shift to more complicated selling and solutions-based [propositions] that won’t take them out of the equation," White explains. “Especially with more millennials coming into the fold, we’ll see brokers looking at different ways of how to incentivize employees to wellness by making recommendations holistically and not just by product.”
Alan Cohen, co-founder and chief strategy officer at Liazon, says brokers have nothing to fear from the exchange platform. “There’s a fear in the marketplace that exchanges will replace brokers or inconvenience brokers, and I actually think that the opposite is true. A choice for a company to go into an exchange, then to choose an exchange, and then further to choose the products that are offered in an exchange — each of those things individually and certainly taken together are way more complicated and more difficult for a company to decide on than spreadsheeting a bunch of life insurance plans,” he says.
Cohen believes the nearly 600 brokers working with Liazon, including the nation’s top firms, will enjoy the same commissions under these exchanges with new voluntary products, and will continue to flex their consulting skills for employers. He adds that as the exchange evolves and changes, the broker can help navigate these changes and can work directly with employees, which is needed year round. One of Liazon’s most successful brokers is setting up a call center to help participants directly evaluate insurance products and needs.
Future
Tinker Kelly, president and CEO of Nashville-based Voluntary Employee Benefit Advisors, a voluntary enrollment firm, says he does not know of many private exchanges that offer voluntary now, but calls the move a “natural progression.”
“What [exchanges] need to do is get up and running in a way to deliver health insurance in an efficient way and as they move forward, voluntary … has become a fundamental part of an employee benefits package,” adds Kelly, an Employee Benefit Adviser Advisory Board member.
In the process, Liazon’s Cohen expects enrollment firms will see their role change. “There may not be a place for voluntary enrollment firms, or these firms will need to morph into firms that help employees navigate exchanges,” he says. “Even words like ‘voluntary’ [have a different meaning] in an exchange environment.”
For example, if an employer gives their workers a set amount of money to make purchases on an exchange, they may apply that money to medical insurance as well as voluntary products, so that voluntary products are no longer fully paid for by the employee.
“It’s not about looking at each product individually, but rather it’s about looking at the combination of insurance and accounts that someone needs to protect themselves against what might happen in their lives,” explains Cohen. “You’re no longer selling individual products, but you’re selling a concept, which is a store."
White from Sun Life expects gradual and steady adoption of voluntary products in its Liazon exchange, with next year and 2016 being key years for early adopters in the mid-size market to spur other employers to jump on the bandwagon.
