Health care reform. Health care reform has created some of the most significant changes to affect the employee benefits world, and companies are feeling pressure to change their benefits strategies to comply with the new legislation. And they're looking to their brokers for help. In fact, a MetLife study shows 57 percent of employers with fewer than 500 employees say they will rely on brokers more than ever because of health care reform. So while the new health care legislation has probably complicated business, it's also made you more important to your clients.

Brokers see the potential promise health care reform holds for them: Roughly half of them say the changes taking place will cause them to change the types of voluntary products they currently sell. In particular, more than half expect to sell additional accident, critical illness, short-term disability, cancer and term life voluntary insurance.

Rising health care costs. Reports show employers are expected to pay nearly 9 percent more for health care costs for their workers in 2011, the highest level in five years. And employers will more than likely ask their workers to absorb 12 percent of these costs, according to a report from consulting group Hewitt Associates. Almost a year after health care reform was signed into law, a Deloitte study found there is $363 billion more in hidden health care costs than reported in most official government accounts. These hidden costs are attributed to expenditures that fall outside traditional areas such as doctors, drug prescriptions, hospitals and insurance coverage and represent an additional 14.7 percent of health care spending not previously captured in the national health expenditure accounts data. Voluntary benefits can be an integral part of a redesigned benefits plan that helps your clients better manage their health care expenses.

More out-of-pocket costs for employees. Employees are experiencing more out-of-pocket costs for health care as their employers have been forced to shift costs to save money on health care expenses. They've seen increased premiums, co-pays and deductibles in recent years, leaving workers with more financial risks than ever before. Employees are more interested than ever in finding a solution to fill the gaps left by changes in their benefits plans. They've expressed considerable interest in purchasing supplemental coverage to help pay for some of the expenses not currently covered by their insurance plans. A 2009 Colonial Life survey showed 78 percent of full-time employed adults who are enrolled in an insurance program provided by their employer or their spouse were at least “somewhat” interested in purchasing voluntary benefits. 

More consumer-directed health plans. Interest in consumer-directed health plans continues to grow. These plans put employers in the driver's seat, counting on them to make more informed and frugal health care decisions if given a bigger financial stake in the process.  Redesigning an employee benefits plan to include voluntary benefits that meet the individual needs of workers can provide a cost-effective benefits strategy for your clients.

Voluntary benefits are exempt from market reforms. The impact of coverage mandates and tax provisions will be minimal when it comes to benefits other than medical. Voluntary benefits will not be offered through insurance exchanges and will be exempt from changes to guaranteed issue and pre-existing condition requirements, as well as from the excise tax on health plans when deducted on a post-tax basis. Accident, long-term care and disability plans aren't subject to the excise tax whether paid for with pre- or after-tax dollars. So voluntary insurance coverage will still be a very relevant part of employee benefits in the future.

THE BENEFITS FOR BROKERS

Brokers can enjoy many advantages with voluntary benefits, including a new revenue stream, stronger client relationships and a fast entry to market.

A reliable new revenue stream. About 40 percent of employees will purchase a voluntary product when enrollment includes one-on-one meetings. Each employee in an account could potentially represent $60 or more in commissions. You can earn even more with bonuses and renewals.

Stronger relationships with group benefit clients. With voluntary benefits, you can provide a way to enhance your clients' existing benefits package at little or no cost while helping meet employees' needs. You also can bring a lot of value-added services to your accounts at no added cost. Doing so helps position you as a full benefits provider, which means your clients won't have to look elsewhere to get their needs met.

Quick ramp-up without additional overhead. You don't have to become an expert in voluntary benefits or invest in any additional overhead if you partner with an experienced voluntary benefits carrier. A full-service voluntary carrier, for example, has proven enrollment systems and benefits communication processes in place, ready to go the minute they're engaged.

THE BENEFITS FOR CLIENTS

Your clients can also enjoy numerous advantages by making voluntary products a part of their benefits plans. These include:

Better management of their benefit costs. For example, employers can offer lower-priced, high-deductible health plans and provide voluntary insurance to help cover the higher deductibles.

Lower payroll taxes. As an added bonus, offering voluntary benefits that qualify for pre-taxing can lower payroll taxes with each enrolled employee.

Time and money savings. Implementing a comprehensive benefits communication and enrollment program can help HR departments preserve precious time and budget resources.

Employee satisfaction. Offering voluntary benefits provides a great incentive for workers to stay with their employers. Employees can receive more benefits with no direct cost to the employer. The employer is also helping employees protect their health, savings and everything they've worked so hard to achieve. A Unum study revealed employees who are offered voluntary benefits in the workplace are more satisfied with their benefits than those who aren't offered them. Fifty-three percent of employees at companies that offer voluntary benefits are satisfied with their benefits packages, compared with 34 percent who say the same at companies without this type of coverage.That kind of satisfaction is valuable to employers since voluntary coverage allows a company to offer more benefits and add perceived value to a plan without affecting the bottom line.

THE VOLUNTARY PRACTICE

Contrary to what you may think, brokers don't need clients with thousands of employees to take advantage of voluntary benefits. In fact, the majority of independent benefits brokers say companies with 100 or fewer employees is their target for sales of those benefits.

Les Blackwell, president and CEO of Benefit & Investment Solutions, understands why. “It's a no-brainer for anyone offering health insurance to offer voluntary benefits to make up for loss of commissions, especially for under-100 employers. We used to see voluntary benefits as something we had to talk employers into, more of an add-on but not a service that added value to our operation. That has changed. There's a lot of opportunity for brokers to rethink this line of business and look at strategic partnerships to develop voluntary programs.”

You can quickly ramp up a voluntary benefits practice and begin maximizing your revenue by partnering with a carrier that specializes in voluntary benefits and has proven expertise in the industry. Working with a company that offers a broad portfolio of products and a host of value-added services gives you the ability to offer turnkey solutions to your clients without the overhead—and allows them to focus on what they do best without needing to become an expert in other areas. Look for a carrier that offers a highly competitive compensation package, but also insist on one that is financially stable and easy to do business with.

When looking for a voluntary carrier to partner with, consider the many variables that can distinguish a good carrier from a mediocre one. Choose a potential carrier based on its ability to offer these important capabilities:

One-on-one benefits counseling. Surveys of employees who meet individually with benefits counselors during their enrollments prove the effectiveness of this method. Virtually all of the 5,000 employees (97 percent) surveyed by Colonial Life say personal benefits counseling improved their understanding of their benefits and that this type of communication is important (98 percent). This type of counseling also increases employee participation. Eastbridge Consulting Group found the average voluntary benefit participation rate for face-to-face enrollments is 46 percent higher than the participation rate for a self-enrollment. That means 46 percent higher commissions for brokers.

Local enrollers. Using an enrollment firm that relies on per-diem enrollers who travel from other locations can add expense and create a lack of continuity in accounts. Brokers can encourage long-term client relationships by using a team of local, established professional benefits counselors who can conduct enrollments and are available for new hire and re-enrollments year after year. This method increases client satisfaction and persistency, which, in turn, increases overall income. 

Strong benefits communication and education. Companies worry about how to communicate the many benefits changes and options facing employees today. Change, both positive and negative, creates a need for enhanced communication and education. By providing benefits communication services to your clients, you'll help employees better understand and value their benefits—and their employer's investment in them. 

The dynamics of the benefits marketplace have changed, and smart brokers see the opportunity to add voluntary products to their menu of solutions. There's plenty of room at the table, so pull up a chair and take a seat.

Elana D'Arciprete is vice president of sales for the Southeastern region of Colonial Life & Accident Insurance Co. She can be reached at 334-472-9200.