Voluntary finds a home on private benefit exchanges
Private benefit exchanges are presenting the perfect opportunity to sell voluntary products, providers are finding. As a result, they are rushing to fill their shelves with a large line of voluntary offerings.
Of 18 carriers participating in an Eastbridge Consulting Group survey, all but two carriers planned to offer their voluntary products on a private benefit exchange, the summer 2015 survey found. Then, private exchange operator hCentive said in December it plans to add new voluntary carriers to its marketplace, including Assurant Employee Benefits, Chard Snyder and Guardian. Further, in that same time frame private exchange operator Liazon partnered with Aflac to sell CI, accident and hospital indemnity through the Liazon exchange.
In Liazon’s Bright Choices exchange, nearly half of employees buying a qualifying health plan purchased a voluntary offering during 2015 open enrollment. According to an internal Liazon analysis of enrollment data from 10 large clients in 2015, employees on Liazon's exchange who purchase medical also purchase an average of five specialty benefits each. Further, in Mercer’s Marketplace about 35% of people bought at least one voluntary product in the same time period.
Voluntary is popular in private exchanges now because brokers have started demanding it. “Broker partners have come to us and said, ‘We want to be able to cross-sell … to a certain segment,’” says Mike Baker, senior vice president and general manager of commercial products at hCentive. “It depends on the brokers’ go-to market plan and type of segment they are servicing.”
“We are looking to meet that demand and expanding to accommodate it,” Baker adds. “You want to provide a comprehensive shopping experience as much as possible and meet [client] needs.” Some products hCentive has added into its exchange include 401(k) guidance services, medical loans, primary care subscription programs, telemedicine, ID theft protection, pet insurance and legal services.
For many employees, the presence of voluntary offerings helps them decide which medical coverage they want to purchase. “We recognized right from the get-go [of our exchange] that when you talk about supplemental coverage … the availability of those products and being able to tie it to the messaging around medical coverage helps a lot of employees overcome the fear factor they might otherwise have,” says Eric Grossman, a senior partner at Mercer.
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On Mercer’s exchange, voluntary offerings are embedded within the same enrollment flow and are offered right after medical coverage is selected. Outside a private exchange, Grossman says, it is almost an afterthought of forcing the employee to look really hard for voluntary offerings, as opposed to an exchange where they are right in front of an employee.
Additionally, on a private exchange the carry-over of employees continuing their voluntary product participation from year one to year two and forward is higher than in traditional enrollment, says Dan Lathrop, Liazon’s director of partnerships and carrier relations.
“By using a private exchange … the difference is in year two to three,” Lathrop says. “When we talked to Aflac, that was what they were excited about. Not just high-pressure sales, then people drop off. [Rather,] it’s a sale of mathematical reason. A financial reason.”