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Benefits Company

Voluntary benefits: Power to choose

Aetna serves up a robust menu of voluntary products with strategic support for agents and their

By Elisabeth Boone, CPCU

Joe MurgoHead of SRC, an Aetna company; Aetna Voluntary

—Joe Murgo
Head of SRC,
an Aetna company
Aetna Voluntary

No doubt about it: In today's employee benefits world, voluntary rules. In response to rising group health premiums and uncertainty about the impact of health care reform, employers of all sizes are exploring ways to offer benefit choices that appeal to employees and don't break the bank.

The growing popularity of voluntary benefits is spurring carriers to create new products, and it's also opening doors for property/casualty agents and brokers. Offering marketing support, streamlined enrollment, and top-notch employee communications, carriers are eager to forge ties with P&C producers whose business clients constitute a ready-made market for voluntary offerings.

That's definitely the case at Aetna, which offers a robust menu of voluntary products and provides an array of tools and resources to support producers. Aetna targets entities that employ from as few as two to more than 3,000 workers and provides a voluntary hospital plan, group accident and group critical illness coverage, dental and vision insurance, life and disability coverage, and a plan that pays a fixed-dollar amount for routine outpatient and inpatient health services.

Joe Murgo, a 30-year veteran of the health care management industry, heads up SRC for Aetna's voluntary segment. Asked to comment on current trends in the voluntary market, he responds: "From a macro perspective, the most significant trend I see is growth. In 2011, sales were $5.5 billion, up 4.5%, and the market is now estimated to be between $19 billion and $26 billion.

"Another key indicator," Murgo continues, "is the number of employers that are offering voluntary benefits. Between 2010 and 2011, there was an 11% increase in the number of companies offering at least one voluntary benefit. Overall, I think the trend is for more and more of America's employers to engage in understanding the various voluntary benefits that are available, and then use them to strengthen the benefits package they offer their workforce," Murgo asserts.

Another reason for the growing popularity of voluntary benefits, he notes, is that certain products can help ease the burden placed on both employers and employees by spiraling group health costs.

"Our voluntary hospital plan pays a lump-sum cash benefit and a daily benefit when the policyholder or a covered family member is hospitalized," Murgo explains. "The cash can be used to offset a higher group health deductible. This gives the employee another source of cash beyond his or her own personal bank account."

Target markets

Among the voluntary products Aetna offers, which are most popular with employers and workers?

"Our products are designed to appeal to different segments of the workforce," Murgo responds. "For example, say an employer wants to focus on providing additional choices to workers who are already receiving benefits like group health insurance. This employer typically will be interested in our hospital indemnity plan, a critical illness plan, and our accident plan. Those three plans can be rolled up into what we call our Financial Protection Bundle. This is an attractive offering for employees who have group health coverage because the bundled plan pays the employee a certain amount of cash for a hospital admission, the diagnosis of a critical illness, or an injury sustained in an off-the-job accident."

Other voluntary products, Murgo explains, are targeted to employers with workers who are not eligible for the employer's group health plan. "Typically these are part-time or seasonal people who don't work enough hours to qualify for the employer's benefits plan," he says. "For this segment of the market, our fixed benefit product is popular because it's an affordable choice for everyday health care expenses, like doctor visits, prescription drugs, and outpatient surgeries. It's a good alternative for people who don't have a catastrophic health plan."

A natural for P&C agents

For property/casualty agents and brokers, Murgo comments, the ability to offer voluntary products to existing clients is a big plus. "There's an established relationship, and if a client has already exhibited enough trust and confidence in the agent to place the P&C coverage, the agent has a receptive audience for voluntary benefits," he says. "The client has already made an important buying decision with the agent, and the agent can leverage that trust to present value-added options in the form of voluntary products. It's not a cold call; it's a natural approach based on a strong bond that likely has been built up between the agent and the CFO or other decision maker over a period of several years. Voluntary is one more arrow in the quiver; it's an attractive option to enhance value for both the employer and its employees, and obviously it generates additional income for the P&C agency or brokerage," Murgo remarks.

In the past, property/casualty agents and brokers often were less than enthusiastic about offering almost any kind of employee benefits products because of the need to become involved in what was then a burdensome enrollment process, preceded by the responsibility for communicating benefit details to employees. Those days are gone, and thanks to automation and dedicated specialists, carriers like Aetna offer tailored communications and a streamlined enrollment experience that require little if any involvement on the part of the agent—except where it counts.

"In our view, the role of the property/casualty agent or broker is to work with the client to ensure that the client can provide favorable enrollment conditions to engage employees in the voluntary offering," Murgo says. "These are mostly employee-paid benefits, so you can't just describe them on a piece of paper and expect people to understand the value of the benefits. Employee engagement is the single biggest factor that drives good enrollment results."

Murgo suggests a key way in which the P&C producer can help the employer engage its employees in exploring voluntary benefits. "The agent or broker can work with us to create a custom Web site that is co-branded with the client's logo, the broker's logo, and our logo. The site—we call them micro-sites—invites each employee to review the voluntary offerings and then indicate an accept decision ('Yes, I want to buy products A and C but not B') or a decline decision ('No, I don't want to buy products A, B, or C').

"With this approach, the employer is ensuring that each employee will make a fair appraisal of the voluntary offerings," Murgo explains. "Even if the employee just does a 20-second scan of the description of each product and decides to buy none of them, the employer can be confident that it has made employees aware of the valuable benefits it is making available. Of course, it's up to each employee to decide whether any or all of the products are appropriate for his or her situation and needs."

Producers can access Aetna's Producer World®, an online service center that offers resources to help them identify marketing opportunities, choose appropriate products based on the size of employer, and manage their book of business.

Eye on the future

Looking ahead, Murgo believes that the market for voluntary benefits will continue to experience strong growth and notes: "The Affordable Care Act certainly will be a driver. A lot of employers have not offered their full-time employees the minimum health insurance coverage required under the act," Murgo explains. "The law now requires any employer with 50 or more full-time employees to make available to those employees what is called 'minimum essential coverage' that meets defined standards. The coverage must be of a certain minimum actuarial value, namely 60%, and it must not cost the employee more than 9.5% of his or her W-2 wages.

"Especially in the lower-margin industries, like restaurants, retail, and hospitality, many employers offer no benefits to their workforce, or offer benefits that are less than the standards mentioned above," Murgo says. "These employers will have to incur new expenses to make this coverage available. In some cases it will be new coverage that's never been offered; in other cases it will be richer coverage. In many instances, the only way the employer will be able to afford to offer the mandated coverage to thousands of people who historically have never had it is to offer high-deductible plans that will keep the employer's costs down," he explains.

"As a result, more people will have deductibles of $2,000, $3,000, or even $5,000. Most consumers, not just low-wage workers, don't have enough savings to cover six months' worth of bills if they have an accident or an unforeseen medical issue. This will make voluntary hospital indemnity plans an increasingly attractive option," Murgo points out.

"As I indicated earlier, this benefit is appealing to employees with high-deductible health plans who face a serious drain on their resources should they become hospitalized. The employee sees that he or she can purchase the plan via payroll deduction for just $5 or $6 a week, and the employer incurs no additional cost while offering a benefit that has perceived value to workers," Murgo says.

For the P&C agent or broker who presents this kind of solution to a client, his or her perceived value to that client will grow exponentially, along with solid growth in trust, retention, and income.

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