Why supplemental health is essential for benefits plans

We’re in a period of immense change. Employees are leaving their jobs at near-record-high rates the pandemic continues to impact business operations, and hybrid work has changed work models forever.

These changes impact our benefits landscape and have shifted conversations around coverage in the United States. The main takeaway? People want more comprehensive benefits plans: 60 percent want their employers to offer supplemental health.

But what is supplemental health, and why is it critical for attracting talent and ensuring your employer clients’ team have what they need to be productive? Read on to learn more.

What Is supplemental health?

Supplemental health classically comprises three core products: accident, critical illness, and hospital coverage.

This coverage is also referred to as “voluntary benefits.” This is because employers tend to offer the products, but employees are responsible for bearing the cost of the premiums after opting in.

Other popular benefits like dental and vision are more commonly paid for — partially or completely — by employers. Because employers subsidize this coverage, these benefits don’t fall under the “supplemental health” umbrella, and are instead referred to as “ancillary coverage.”

Supplemental health wasn’t considered essential in the recent past

Health care expenses jumped 47 percent in the past decade, outpacing inflation and wage growth. This jump forced many employers to make a choice between controlling costs and lowering the quality of the health coverage, or increasing costs and having to sacrifice in other benefits.

Many employers had their capital and attention fixated on the core health plan, so supplemental health plans fell by the wayside. This also explains the popularity of high deductible health plans over the past 10 years; they serve as a mechanism to control explosive costs for employers.

But cost isn’t the only reason supplemental health benefits have been considered nonessential. Employers and employees also misunderstand them.

Take hospital indemnity coverage, for example. Employees might assume their health insurance covers a lengthy hospital stay, so they won’t enroll. And if employers think the same way, they likely won’t offer this supplemental health coverage to employees.

But for those with a high-deductible medical plan, a long hospital stay could drain their savings. That can leave employees unnecessarily vulnerable, especially amid a global pandemic.

There’s a need for employers and their benefit advisors to devote more resources to both offering supplemental benefits and educating employees about the value they provide.

Why supplemental health Is essential today

Ninety percent of employees believe the need for supplemental insurance has increased since the start of the pandemic, and there are three main reasons why.

The first is the pandemic. Beyond its impact on work models and the job market, COVID-19 has underscored the importance of comprehensive coverage. Forty-three percent of respondents in a 2020 study said that COVID-19 caused them to focus on their health more than before. And in 2021, new life insurance premiums increased by 44 percent.

The second reason is the increase of remote work, which highlights the demand for person-centric benefits as opposed to office-centric ones. For example, 43 percent of adults want to use telehealth services even after the pandemic is over.

An important first step that employers can take to address this demand is scheduling consultations with benefits consultants. Doing so helps educate team members about digital and remote benefits and sparks conversations around the value those supplemental health benefits provide.

And with the evolution of benefits administration technology, brokers can record sessions and virtual walkthroughs for their clients, making education more accessible.

The third reason is the competitive labor market. There are nearly twice as many job openings as there are job seekers. Today, supplemental health is a key selling point for employers.

In fact, a recent study estimated that even a 5.1 percent wage increase wouldn’t return labor participation to pre-pandemic levels, citing the demand for other benefits from Millennials and Gen X.

More and more, we’re seeing job seekers favor employers that value workers’ wellbeing. People want to know that their future workplace fosters positivity and wellness. One way to show that is by offering supplemental health.

How to meet the demand for supplemental health

Large corporations have no excuse not to offer supplemental health. And fortunately, a significant percentage of larger companies already offer supplemental health today; they have the funding, resources, and internal expertise to construct more comprehensive benefits plans for their staff.

Smaller businesses, on the other hand, often don’t have this luxury. So how can small business leaders compete? There are two ways to level the playing field.

The first is to find a quality insurance partner who can handle everything from enrollment to offering continual customer support. This takes those responsibilities off the business leader’s plate and also means they don’t have to become an expert on various coverages. Instead, they can delegate to the experts.

As the benefits landscape grows more competitive, it’s not enough to just find an insurance partner. SMBs need to find a quality partner that helps support employees.

The second way is to extend more supplemental health or subsidize the cost of supplemental health coverage.

In the past, a trendy benefit was “we have a ping pong table and beer on tap.” Although these perks were meant to attract a vibrant workforce, we now know that more than half of today’s employees are interested in a more thoughtful and holistic approach.

Today, mental health is an increasingly popular piece of coverage. Companies that want to set themselves apart further might consider offering subscriptions to meditation apps, or provide stipends for mental wellness (spa stays, therapy co-pays, etc.).

The best plans are different for each employer

In a previous article for BenefitsPRO, I stated that employers need to shift from an office-centric to a person-centric benefits model to accommodate the realities of remote work.

When companies enact full or partial return-to-office plans, the best benefits model for them may change. For instance, commuter benefits don’t make much sense if your workplace is remote. But if your company returns to the office, they could save employees hundreds of dollars a year.

As the benefits landscape continues to change, the most beneficial thing business leaders can do is survey their workforce. Ask what additional coverage your team wants and offer supplemental health tailored to these discussions. This effort goes a long way in demonstrating to your employees that they matter to you as professionals and as people.

Alex Frommeyer is the co-founder and CEO of Beam, a digitally-enabled employee benefits company that provides the industry’s most innovative dental insurance product.