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Pat To Play
The new phenomenon of ‘voluntary' benefits
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Business New Haven
2/5/2001
By: Priscilla Searles
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One-hundred-percent company-paid benefit plans are rapidly becoming a thing of the past. Employees want and need more than companies are giving them. Thus many are seeking additional coverage or what has become a key phrase in the business world of today: so-called voluntary benefits.
Benefits packages that include 100-percent medical coverage are becoming extinct, and providing company-paid disability, dental, long-term care or life insurance isn't financially feasible for most companies. But a large portion of the population has come to realize that additional coverage might become critical. Enter voluntary benefits, the largest growth marketplace in the fringe-benefits field.
“Availability of volunteer benefits is becoming a very important need in the workplace because companies can only spend so many dollars on medical benefits but many employees want additional coverage and are willing to pay extra,” explains Stephen Glick of Coordinated Financial Resources in Orange. Glick is also administrator of the Chamber Insurance Trust, an independent insurance agency that develops benefit programs for small and mid-sized companies in Connecticut, that are sold through local Chambers of .Commerce.
According to Glick, the movement toward voluntary benefits has happened over just the last few years. It was only a short time ago when long-term care insurance, for example, was unheard of.
“There is a stronger awareness and more competition for employers to get employees, so the packages have become better - even if it is voluntary,” says Glick. “In Connecticut we have an employee shortage, so in order to recruit people smaller companies have to expand their portfolio in order to attract employees.”
People making a move from one company to another want more than additional income; they are making judgments based on benefits packages. Employees can of course shop for extra benefits on their own, but when employers offer these extra benefits with the employee paying 100 percent of the voluntary benefits, the advantage is the buying power of group insurance: lower rates.
Companies might look for an insurance carrier other than the one who is providing the company-paid benefits package and seek other carriers that are able to put a package together for voluntary benefits. In years past, companies wanted at least 50- or even 60-percent participation before offering voluntary benefits. Now they can offer this coverage to smaller groups of employees.
One of the fastest-growing insurance packages available to some of Connecticut's 35,000 chamber of commerce member businesses is buying insurance through their local chamber. The Milford Chamber of Commerce, for example, provides their members with alternatives and options in health-care solutions.
Providing dental plans, long-term care and a variety of disability plans using the buying power of chambers - which represent the majority of small businesses in Connecticut - makes sense. Members get a lower rate through their chamber if they are members due to the buying power of the group. Insurance through chambers is growing apace as more and more chambers decide that this service is one they must offer their membership.
Some small businesses offer employees options regarding which specific benefits their package will provide. Laurie Kendall-Ellis, president and principal of Allied Health Rehabilitation in West Haven, has nine employees who work 30 hours or more weekly and are eligible for insurance benefits. “I review my benefit package annually, look at where the business is financially and, when able, offer an increase in the benefit package,” she says.
“For example, in 1999 we were paying 50 percent of the employee's medical insurance premium. In the year 2000 we gave the employees a choice of an increase in the medical insurance paid by the company to 70 percent, or we offered to develop a company-paid employee dental plan or life insurance and short-term disability,” Kendall-Ellis explains.
“The employees chose the 70 percent,” she says. “But the employees decided, that since the subject of dental came up, they wanted coverage and formed a group to get a dental plan through the company but 100 percent paid for by the employees. They got themselves together and organized. I went to our carrier, asking him to put together a proposal, which was then presented to the employees. Of the nine employees, four participated in the dental plan. The advantage of buying it this way is, of course, a group rate - considerably cheaper than it could be purchased on your own.”
Kendall-Ellis points out that the mean age of her employees is 25. “The employees are young and didn't ask about long-term care insurance or life insurance,” she says. “All we can do as employers is present the options, bring in people who have the knowledge to answer questions. But the ultimate decision when it is coming out of the employees' pocket is theirs. Still, young employees should be encouraged to provide for their future, and a company has a responsibility to present the information. Making the information available shows employees you care.”
Kendall-Ellis hits the nail on the head when she says that young people don't ask about benefits such as disability, life insurance and long-term care. Long-term care is likely a long way off for most 20- to 30-somethings, but dental bills are something that they can relate to today.
For many young workers, selling them on the idea of voluntary life insurance at age 20 is as hard as convincing them that investing in a 401(k) at age 20 is a smart thing to do. But smart companies have learned, as Kendall-Ellis has, to keep on top of what is available and pass that information on to employees. “In order for employees to participate in voluntary benefits, they first have to understand them, regardless of age,” Kendall-Ellis explains.
John Cunneen, owner of Cunneen Parish Fund Raising Services in Hamden has begun to address voluntary benefits for his 19 employees. “We recently looked at our benefits and decided to include a 100-percent company-paid long-term disability,” says Cunneen. “We feel the premium is reasonable for what we get.
“At the same time, the dental was presented by our carrier and we weighed one against the other. We decided to provide the long-term disability and make the dental available as a voluntary benefit. We are just getting started on this new benefit package and so far, of our 19 employees, seven have decided to participate in the voluntary dental.
As to future benefits, Cunneen makes it clear that, as other companies do, he will continue to examine the benefits package and look at what the company can afford to provide and what is possible to make available in voluntary benefits that the employee will pay for 100 percent. Regarding how each employee decides if participation in a voluntary benefit program is for them, Cunneen believes that presenting complete and correct information to employees is critical to having employee make sound decisions. Cunneen also points out that which particular voluntary benefits an employee is interested in is often defined by what benefits the spouse has access to.
Voluntary benefits that are made available to employees aren't exclusively in the health-care realm. Pre-paid legal services are beginning to be marketed as a voluntary benefit by some companies, while group rates for health clubs have been around for a number of years. North Haven Health & Racquet Club, for example, offers corporate rates if a minimum of five employees join.
Some companies have memberships at the club, and if an employee of that company wishes to join the club, he or she is offered a discounted rate. Some companies choose to pay part of the membership for employees and the employee pays the difference.
According to the club, each company is different and they all choose their own plan. The club points out that some workers may not realize that their company is a participant. Also, if a group of employees from one company wish to join, the corporate rate applies - no involvement on the part of the corporation is necessary.
So the next time you go off to your local health club, ask if your company has a corporate program or if some others from your company belong. The power of group purchasing is a big incentive to ask questions.
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