Let’s consider the increase in voluntary benefit offerings as part of an employer’s health plan strategy. More specifically, how voluntary benefits relate to the growing trend in HDHPs and HSAs.
Interestingly, there is a correlation with the rising HDHP and HSA offering rate. From 2008 to 2020, voluntary benefit offer rates grew 54 percent. This increase mirrored the growth of HDHPs and HSAs - 53 and 54 percent, respectively.1
Voluntary benefit offerings are proven and important components of a benefits strategy that includes HDHPs and HSAs. As a part of the cost-sharing health plan strategy to offset high deductibles and out-of-pocket costs, voluntary benefits round out total compensation packages for an evolving employee population looking for customizable and affordable benefits packages.
The growth of voluntary benefits offerings has been steady, but there was a notable spike in the trend. Large employers2 increased their voluntary benefits offer rate dramatically between 2011 and 2012. This spike is attributed to three main drivers: Cost shifting, health care reform and economic growth.3
A closer look at the large employer trend drivers
Cost Shifting – Employers shifted to HDHP benefit strategies to control health plan costs. As a result, employers aimed to offset higher employee deductibles and potential gaps in coverage with voluntary benefits.
Health Care Reform - Arguably a part of employers' cost-shifting strategy, health care reform created the need to re-evaluate health plan offerings due to looming legislation. Legislations that passed under the ACA changed the employer health plan game. The ACA proposed to effectively limit the richer employer-funded health care plans with what had been deemed a Cadillac Tax. It also mandated the enrollment of 30M+ uninsured Americans, creating an added burden on an already strapped health insurance model. As a result, employers had to adjust by diversifying their offerings to include health plans and voluntary benefits that better fit the needs of both the employer and the employee.
Economic Growth – Employers sensed a turn in the markets. The recovery of the U.S. economy began and the decline in unemployment prompted employers to enhance total compensation packages that expanded health plan offerings and voluntary benefits. This provided flexible and robust benefits packages that would attract and retain top talent in a growing economy.
But, what is it about the change in health plan offerings that can be addressed by voluntary benefits?
We previously talked about the disparity in employee saving and the financial requirements of electing for an HDHP with an HSA (see The Exponential Rise in Consumer-driven Health Plans). Although HDHPs and HSAs are generally implemented to help employees take advantage of more cost-conscious options, there are opportunities to protect your most vulnerable employees.
Consider the nature of HSAs. An HSA is a valuable tool in terms of setting aside money regularly to help with expenses that are accrued in the utilization of an employees health plan. The money is withdrawn automatically and pre-tax in order to give employees financial security with no actual penalty. HSAs may even have greater value as a long-term savings tool, due to their specific portability and earning potential, especially for young workers.
Secondly, and even probably more importantly, health insurance plans may lack coverage for many expenses. Health care-related charges like transportation costs, child care and lost income due to missed work are not usually covered. These unplanned expenses usually come as a surprise and may create financial hardships for employees and families who are not prepared to handle the extra cost. HDHP plans with HSA utilization aren't always enough to cover added expenses, either.
This is where voluntary benefits like accident insurance, critical illness insurance and hospital indemnity insurance are invaluable additions. By addressing financial, health, and family needs that arise during regular plan use, these employer benefits offerings are opportunities to give employees the flexibility they need to make choices that allow them to protect themselves financially and create stability in their health care and wellness while still working within a cost-conscious benefits environment.
The trend proves the correlation. Voluntary benefits have become an essential part of health plan offerings as the employer market shifts to more cost-sharing options and employees are utilizing HDHPs and HSAs to drive personal cost savings. Utilizing a robust communication and education effort, employers can implement a health plan strategy that will ensure healthy, well-informed employees and result in employer health plan cost-savings.
Take a look! Download our insightful Exponential Rise in Consumer-driven Health Plans infographic now.
1. Benefitfocus platform utilization statistics.
2. Large employers defined as 1,000+ employees
3 Benefits Communication Incorporated. Aetna: Voluntary Benefits in a Post-Health Care Reform World.