Voluntary Benefits: Choosing the Right Fit

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About Our Speaker

Since 1994, Steve’s been in the voluntary

benefits industry and advocates a professional,

consultative approach that encourages

suitability over carrier-specificity. Steve is

revered as a voluntary benefits expert among

his peers and has been awarded as such. Steve

stays involved with the insurance and financial

community through his National Association of

Insurance and Financial Advisors membership

and currently serves on the Greater Chesapeake

Charitable Foundation Board.

Agenda

Discovery processes for an effective

integrated voluntary benefits plan

• State of the Market

• Primary vs. Supplemental

• Price vs. Process

• Client Centric vs. RFP Mentality

• Communication and Enrollment

• Administrative Platforms

Choosing the Right Fit

Current Plans - Designs and

Goals

Group demographics and locations

Plan pricing and

underwriting

Prior experiences

Communication and Enrollment

Strategy

Administration – enrollment

and billing

Primary vs. Supplemental

Primary

• Health Insurance

• Life Insurance

• Disability Income Protection

• Retirement Benefits

• Long Term Care

Supplemental

• Gap/Hospital Indemnity

• Accident

• Critical Illness

• Voluntary Disability

• Voluntary Term and/or Permanent Life Insurance

• Non-Insurance Benefits (identity theft, legal, pet, etc.)

State of the Market

Employer Perspective • 45% of employers view

voluntary benefits as an essential part of an integrated health benefits package, rather than just an add-on

• 58% of employers believe voluntary benefits improve employee morale and satisfaction

• 60% of employers use voluntary benefits to replace employer paid benefits and reduce costs

45%

58%

60%

0% 10% 20% 30% 40% 50% 60% 70%

Essential Part of BenefitsPackage

Improve Morale

Replace Employer-Paid Benefits

Source: MetLife Study 2014 and LIMRA Study 2011

46%

51%

62%

78%

0% 20% 40% 60% 80% 100%

Not Prepared to Pay Out-of-Pocket Expenses

Less than $1,000 Available

Personal Bankruptcies Filed dueto Medical Problems

Personal Bankruptcies Filedwith Medical Insurance at the

Start of Injury/Illness

State of the Market

Employer Perspective • 46% of employees say they are not

prepared to pay out-of-pocket expenses not covered by major medical insurance

• 51% of employees say they have less than $1,000 available

• 62% of all personal bankruptcies filed in the United States are caused by medical problems

• 78% of all personal bankruptcies filed due to medical problems, those filers had medical insurance at the start of their illness/injury

Source: Aflac in 2012 and Harvard Business Study in 2009

Question #1

Which of the following voluntary benefits is not considered to be a “primary” insurance risk?

a. Health Insurance

b. Hospital Indemnity Insurance

c. Life Insurance

d. Disability Insurance

Hospital Indemnity

• HSA and non-HSA plans

• Purpose is to cover employee risk from deductible and co- insurance, less so from out-of-pocket non-medical expenses that CI and ACC can cover better

• Types of expenses – hospital, surgical, diagnostic, ER, CI, ACC, Wellness

• Family deductible vs. individual deductible – different than medical plans

• Cannot cover all of the out-of-pocket expenses, but an acceptable amount

Hospital Indemnity

• HSA plans cannot cover surgical, diagnostic or ER; just confinement

• Some carriers offer on group level where others offer on employee level, for example, one of the three medical plans is HSA

• HRA plans can add surgical (inpatient and/or outpatient), diagnostic, ER, physician visits (why insure copays?), CI, ACC, Wellness

Hospital Indemnity

• Pre-ex vs. no pre-ex, takeover or current pre-ex

• Annual true open enrollment vs. late entrants

• Dual options

• Age-based rates vs. composite rates

• Keep in mind levels of coverage alongside other supplemental health plans

Question #2

Hospital Indemnity plans (non-HSA) can offer which of the following benefits in addition to a confinement benefit?

a. Outpatient surgery

b. Diagnostic imaging benefit

c. Critical illness benefit

d. All of the above

Accident Plans

• Help pay for both medical and non-medical out-of-pocket expenses incurred due to accidental injury

• Expansive schedule of benefits per incident

• Average accident costs $4,000 out-of-pocket

• Some customization is allowed, such as ER vs. urgent care benefit, hospitalization vs. outpatient, and AD&D and catastrophic vs. common

• Price vs. Benefits ($4/wk vs. $6/wk)

Accident Plans

• 24-hour plan vs. off-the-

job only plan

• Effect on workers comp

claims

• Wellness benefit – costs and use

• Dual options – worth it?

Question #3

Accident plans can typically be customized for which of the following benefits?

a. ER and urgent care emergency treatment

b. Accident, death and dismemberment

c. Hospital confinement

d. All of the above

• Help pay for both medical and non-medical out-of-pocket expenses incurred due to accidental injury

• Benefits, typically heart attack, stroke, cancer, and organ failure

• Can include Parkinson’s, ALS, MS, Alzheimer’s, coma, loss of speech, sight, hearing, and childhood diseases

• Lesser amounts paid for bypass surgery and skin cancer

• Rarely see “categories” of benefits anymore, limiting total payouts

Critical Illness Plans

• Guaranteed Issue and Participation

• Open enrollment one year vs. true annual open enrollment

• No Pre-ex vs. Pre-Existing Conditions

• Benefits reduced 50% at age 70?

• Recurrent benefit amounts – 25% to 100%

• Issue age vs. age-based rates

• Uni-smoker vs. non-smoker rates

• Spouse benefits options or a fixed amount

• Wellness amounts and costs

Critical Illness Plans

Question #4

Critical Illness Plans can be customized for which of the following benefits?

a. Recurrent benefit

b. Rate basis – issue age vs. attained age

c. Smoker distinct vs. blended

d. All of the above

Life Insurance

• Voluntary Term with Permanent (Universal Life or Whole Life) – should always be together

• Lifetime employee benefit

• Life insurance planning and advice

• Adding Universal Life or Whole Life with Long Term Care rider

• Guarantee Issue or CGI

Disability Insurance

• Group vs. Individual

• Monthly STD claims vs. Weekly STD claims

• Incremental benefits vs. flat percentage, typically 60%, a benefit for older employees or dual income employees?

• Dual offers on both STD & LTD (elimination period for STD and benefit period for LTD)

Question #5

Which type of disability plan is generally more competitive from a rate standpoint and a contract standpoint?

a. Individual

b. Group

Communication & Enrollment Strategies

• Methods: • Face-to-face, call center, online

• Combination

• Messaging: • Customized

• Clear

• Communicated during enrollment

• Participation requirements vs. acknowledgment requirements

• Open to new hires or just once per year? GI?

Benefit Administration System

• Can voluntary benefits easily be a part of the core platform? • Single sign-on or imbedded in the system? • Underwriting/EOI within the system or separate process • Anniversary with core benefits or separate , or both? • Is the system open throughout the year or just at open

enrollment?

Choosing the Right Fit

Current Plans - Designs and

Goals

Group demographics and locations

Plan pricing and

underwriting

Prior experiences

Communication and Enrollment

Strategy

Administration – enrollment

and billing

Questions? • If you have any further questions about the information discussed in this

webinar, please feel free to contact us at:

• Crawford Advisors, LLC

HQ: 200 International Circle | Suite 4500| Hunt Valley, MD 21031

1813 Sweetbay Drive | Suite 10 | Salisbury, MD 21804

M.F. Irvine: 21 East 5th Avenue | Conshohocken, PA 19428

Stoudt Advisors: 280 Granite Run Drive | Suite 250 | Lancaster, PA 17601

2975 W. Executive Parkway, Lehi, UT 84043

• (800) 451-8519 | www.crawfordadvisors.com

• Stephen Ivey, Director Voluntary Benefits – SIvey@crawfordadvisors.com

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