Voluntary insurance plans are in vogue these days. A perfect storm of health care reform, rising benefits costs, and the employers' desire to offer their employees more benefits options have led to a strong demand for voluntary plans, and carriers are beefing up their voluntary offerings.
Agents who are already familiar with voluntary products may be reaping the rewards of this surge in interest, but for agents who previously made their living selling major medical insurance or other employer-sponsored plans, the voluntary world may seem bewildering. They may be concerned about overwhelming their clients with additional red tape in the form of payroll deductions, bill reconciliation, and enrollment procedures. Or, agents new to the voluntary market may not feel comfortable providing advice on plans they are unfamiliar with.
These are understandable concerns, so for those who are just dipping their toes in the voluntary pool, here are a few pointers for navigating the market:
- Identify a good product mix: Voluntary plans can make a benefits offering more robust, and lend themselves to packaging with products like the high-deductible plans that are becoming increasingly popular these days. Voluntary plans covering critical illnesses, cancer, hospitalization, or accidents pay lump-sum benefits for covered illnesses or scenarios, and allow employees to cushion the blows of higher deductibles, co-payments, and out-of-pocket expenses.
- Group or Individual? Both platforms have benefits and drawbacks, depending on the circumstances of the client and producer. For group offerings, the plan is sited in the state where the company is corporately headquartered, while individual plans are sited in every state where employees are located. So for a company with locations in 20 states, you might have 20 separate applications and filings if you offer individual plans, but just one application for a group plan.
Group plans may offer lower rates and easier underwriting, but benefits in group plans are usually more limited than individual plans, since you can add riders to individual plans. And group plans can only be continued if the employer keeps the plan in force, while employees can retain coverage under individual plans if they leave an employer for any reason, even if the employer later drops the coverage.
Finally, there is a key difference in how group and individual plans treat commissions. In group plans the broker of record is not vested, so the broker will lose the business and any in-force and new business written if the employer starts working with a new broker. With individual plans, the broker of record keeps the business that's already on the books and its commissions.
- Enrollment resources: Many carriers offer resources that can help make enrollments more seamless, even with the addition of voluntary products in an enrollment. Products are being offered in packages that allow employees to sign up for several plans with one application, and automated tools and other helpful processes may be available to simplify the enrollment process and better educate employees. These include online tools that allow employees to learn more about products and their coverage options, and make their purchasing decisions online. Carriers can also offer training support that allows brokers to sign up employees themselves, rather than having to hire a third-party firm.
- Communication strategy: When looking at voluntary offerings, make sure you will have the means to communicate their benefits to employers and employees through e-mail blasts, flyers, payroll stuffers, and other vehicles. Education is the key because voluntary products are still relatively unknown and employers may not know they can offer such plans alongside their major medical plans for a seamless enrollment. Talk to carriers about the resources they have, and the strategies they might employ, so you can communicate effectively with employers and employees.
Steve Howard is vice president of Benefit Solutions, a division of American General Life Companies. His monthly blog on ASJonline addresses issues and trends in the insurance industry. He can be reached at [email protected].
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