Why spreadsheeting voluntary benefits works

With unemployment at all-time lows, more and more employers are offering voluntary benefits to attract and retain high quality employees. In fact, a recent Aflac study shows that 42 percent of employees say “improving my benefit package” is one thing employers could do to keep them in their job. This is second only to “increase my salary.”

Because of the growing trend in participation with these products, more carriers than ever are competing in this space. According to a 2017 Eastbridge Consulting study, 15 different insurance carriers wrote over $9 million in accident premium. With all of these options, how does a broker or employer compare and contrast these products? Before answering this question, it is vitally important that we define voluntary benefits (VBs).

Related: 5 trends to expect in voluntary benefits in 2019

From an employee’s perspective VBs are any product for which there is a payroll deduction, including major medical. When an employee feels that they are paying for any benefit, regardless of employer contribution, the plan is in fact, “voluntary” to them. Most employers and brokers would classify VBs as any product to which employers are not contributing. Lastly, enrollment firms and benefit counselors will tell you that VBs are the traditional worksite products like accident indemnity, critical illness, hospital indemnity, cancer, universal life/LTC, and sometimes short-term disability. Over the past several years, voluntary benefits have gone by several names, including but not limited to: worksite, supplemental, ancillary, enhanced, and gap. All of these terms correctly describe VB, except for “gap.” True gap insurance is an “expense incurred” benefit that coordinates with the underlying major medical carrier to pay claims based off an EOB; it is not an Aflac Hospital Plan, Colonial Medical Bridge, or Allstate Group Indemnity Medical. But, I digress. For purposes of this article, I will be using the term “voluntary benefits” to refer to the traditional worksite plans typically offered by carriers such as Aflac, Allstate, Colonial, Transamerica, and many others.

While messaging in the industry has changed over the past 10+ years, one sentiment seems to remain constant: voluntary benefits cannot be spreadsheeted. This statement and ideology is laughable, at best. Not only can the value of VBs be shown in a spreadsheet format, but I’ll explain why it should be shown with every single renewal.

Let’s start with the can. Numbers are a universal language. Numbers can be input into an Excel file and compared. Brokers and employers can look at a spreadsheet and evaluate different benefits and premium amounts. Sure, no two plans will be identical from carriers to carrier, but there are certainly enough similarities to compare and contrast the value of various plan designs.

Take an accident plan for example. Most carriers will include several bells and whistles to separate their plan from the field. However, most accident plans will contain coverage for the most commonly used benefits, such as wellness, initial treatment, follow-up visits, major diagnostic, physical therapy, hospital confinement, broken bones, and dislocations. Identify the most important parts of each product, and compare those line items between carriers. Bam! It’s really that simple.

Now for the why.

The why for brokers:

For brokers, the why is both offensive and defensive. Traditionally speaking, most brokers focused on medical, dental, vision, LTD/STD, and group term life. By adding another line of coverage with VB, you effectively increase your value to your client and therefore the revenue you generate. However, most of your clients offer these products today, so in order to win the business, you will need to displace the incumbent. Spreadsheeting is one way to show additional value or cost savings. In addition to increasing revenue, adding lines of VB also insulates your current book of business. Your best clients are someone else’s best prospects. Brokers are using these VB products to become more creative in their prospecting strategies. Comparing multiple carriers will help you to decrease the chances of another broker getting a seat at the table by pitching a solution that you haven’t shown. Even if you are averse to offering voluntary benefits, you should still be prudent enough to allow your client to say “no thanks.”

Bottom-line: Brokers need to spreadsheet VB to add value to their clients and protect their current book of business.

The why for employers:

In October of 2018, unemployment reached 3.7 percent, the lowest rate since 1969. This means that employers are now competing for the same talent pool. Competing on salary alone is no longer a solution. Employees want benefits. “Sixty percent of employees say a benefits package offering is extremely or very important to their job satisfaction, and 53 percent say it’s extremely or very important to their employer loyalty,” according to the 2017 Aflac Workforce Report.

This competitive landscape is one of the factors contributing to the demand for VBs. With demand, comes supply. More and more carriers have started to offer VBs. Unlike major medical, this has caused benefits to increase and premiums to decrease. Shop what’s available to you. Demand to see options. You are protecting the most important financial decision that your employees will make all year, benefit elections.

Related: The first domino has fallen: accelerating the death of payroll deduction

Many of my current clients initially told me, “My carrier agent told me that I have an old plan, and that new plans won’t compete with it. That I should keep this plan forever.”

I call BS. If this statement is true, it should be easy to prove, because numbers don’t lie. Most of the time, this statement is just plain false. Once we spreadsheet the price and products, we find that over 90 percent of the time, we are able to offer enhanced benefits, cost savings, and/or underwriting value with a new carrier.

There are, however, exceptions to the rules. For example, some cancer plans have “building benefit riders” that increase the initial diagnosis benefit every year that the policy is in force. Other plans have “return of premium riders” that refund the premium minus claims after a set amount of time (typically 20 years). Be sure to look at your policy details (in writing!) before making any benefit changes.

Bottom-line: Employers need to spreadsheet these plans to make sure that they are providing their employees with the best options available.

The why for enrollment firms:

Historically, most enrollment firms would have identified their “go to” carrier, place business with that carrier for a few years, then find a different “go to” carrier and repeat the process. This wasn’t a bad strategy, because it was a win/win/win for the client, broker, and enrollment firm. The client received a new guarantee issued underwriting offer, the broker was able to design new products that complemented changes in major medical, and the enrollment firm generated new revenue to cover the costs of 1-1 enrollments and other value adds, but those days are long gone.

One size never fits all. There are too many options on the market today to simply designate a “go to” carrier. With more and more benefit producers starting to take Broker of Record on VBs, both the producers and their clients are expecting these benefits to be presented in a renewal discussion, just like any other product lines; this means spread-sheeting. Numbers are part of the equation and should factor in to any benefit decision.

Additionally, enrollment firms are starting to compete with career carrier reps that are marketing themselves as “agnostic,” but only selling the same carrier that they’ve sold their entire career. Separate yourself from the pack. Show off your ability to quote and implement several different carriers. Be a resource for your broker partners, not just a product pusher.

During a recent conversation with a friend who owns an enrollment firm I heard, “Why should I spreadsheet? Shouldn’t my clients trust me?” Of course they should, but it should be because you’ve earned it, and continue to earn it. Why wouldn’t you want to go the extra step to make your broker partner look good to their clients by showing that a carrier agnostic and analytical approach was part of the evaluation process while choosing the recommended VB strategy?

Bottom line: Enrollment firms need to spreadsheet these plans, because it’s their job to make their broker partners look good.

Overall, there are only three reasons someone would say voluntary benefits can’t be spreadsheeted:

1. Their product isn’t competitive.
2. They don’t know the market well enough to shop the products with multiple carriers.
3. They don’t have the time or desire to put in the extra work.

Anything outside of these reasons is nothing more than another lame excuse.

As the market changes, we all need to become better consumers. Part of consuming is shopping, but while numbers are an important part to any benefit decision, spread sheeting should only be one part of the discussion. Other aspects to consider are: billing, claims, enrollment, platform compatibility, carrier consolidation, and ancillary/medical renewal negotiation. If you are a broker or employer offering voluntary benefits, ask your expert for a carrier agnostic spreadsheet comparison for your next renewal.