Winning combo: How high-deductible plans plus voluntary benefits solve problems

As employers struggle to control costs and still provide their workers effective and affordable benefits packages, many are finding a great solution in the strategic use of voluntary benefits.

Many are also creating win-win scenarios by pairing high-deductible insurance plans (HDHPs) with voluntary options such as cancer insurance, critical illness insurance and/or accident insurance.

Employees may pay relatively low premiums for their basic healthcare policy with the understanding they’ll pay out of pocket (up to a certain annual maximum) for the costs they’ll incur. They can then choose the additional voluntary benefit plans they believe might apply to their circumstances, which pay cash benefits to help cover some of the out-of-pocket costs that could occur, for example, in treating a serious disease or undergoing a long hospital stay. While employers don’t typically pay for voluntary benefits, they’re usually able to secure them at reduced prices because of their group buying power.

Combining group medical plans with voluntary benefit plans can provide an effective amount of protection for families that are relatively healthy, keeping their premiums manageable while also controlling the cost of employee healthcare for employers.

A 2018 report from Benefitfocus notes that 70% of large U.S. employers last year were offering at least one HDHP to their workers, up from 58% in 2016. Forty-two percent offered either voluntary accident, critical illness or hospital indemnity insurance to workers, while 18% offered all three. And their employees opted in; 25% elected at least one of those options.

“For employers to attract and retain the best talent, they must continue to offer a wide range of benefit options to fit the wide range of needs present in the workforce,” states the report. “With better information on how employees are using their current benefits, what’s driving costs and where coverage gaps exist, employers can make better decisions on what plans and programs they should be offering.”

Some key advantages of offering voluntary benefits with high-deductible plans:

  • Even small businesses can usually offer them at prices more favorable than in the open marketplace. Your employees may be able to use pre-tax dollars to pay for them, with deductions taken directly from their paychecks.
  • Employees won’t have to shop around on their own for the coverage they need/want.
  • Most voluntary deductions are portable, meaning employees can keep them if you opt to discontinue them or they switch to a different employer.
  • Voluntary benefits can help with everyday living costs as well as healthcare expenses that would otherwise be out-of-pocket because the employee hasn’t reached his HDHP deductible. For example, critical illness insurance may provide relief by paying a benefit, which can be used to cover living expenses or could be used to help cover the thousands of dollars in costs associated with care following a stroke. “Even savvy consumers who understand what they’re getting into when they enroll in an HDHP may not anticipate or be able to cover the out-of-pocket medical expenses not covered by the plans,” notes an Aflac study.
  • Research shows employees who opt for HDHPs are more likely to optimize wellness and cost-savings plans offered by their employers, such as smoking cessation programs, telemedicine, healthy eating programs and/or wearable devices that promote wellness, according to Aflac. Workers who take action to protect their own health help reduce healthcare costs for all.
  • Voluntary benefits can often be offered to part-timers as well as full-timers.
  • Having a choice of voluntary benefits gives employees a better sense of control over their insurance benefits, an element that could help you attract and retain workers. Employees enrolled in voluntary insurance benefits are more likely to be extremely or very satisfied in their jobs (78%) compared to those who aren’t offered any (57%), according to Aflac.

When it comes to controlling out-of-pocket costs, employer packages that offer voluntary benefits in addition to HDHPs can be a great solution.

If you have questions or need more information about voluntary benefits, contact the specialists at Ochs: 651-665-3789 or email ochs@ochsinc.com.

DOFU 7-2019

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