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Employers offer niche benefits

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ORLANDO, Fla. — As open enrollment nears, employers are looking to a variety of voluntary benefits to bolster employee benefit packages and fill the gaps left by high-deductible health plans.

Because of rising health costs and efforts to avoid triggering the Cadillac tax — the health care reform law's 40% excise tax on the portion of health care premiums that exceed $10,200 for single coverage and $27,500 for family coverage starting in 2018 — voluntary benefits are increasingly being seen by brokers and employers as necessary, several benefits experts said.

“The market is trending toward (offering) more and more voluntary benefits,” Heather Garbers, Newport Beach, California-based vice president of voluntary benefits and technology with Hub International Ltd., said during a session last month of the Employer Healthcare and Benefits Congress in Orlando, Florida. “They are necessary for employers to offer and for a lot of employees to have.”

The greatest use of voluntary benefits is to “round out” a medical plan, Ms. Garbers said. Options like accident insurance and a hospitalization plan can complement health plans with high deductibles, she said.

And as the Cadillac tax prompts more employers to reduce or eliminate flexible spending accounts, health savings accounts and health reimbursement arrangements, she said, “voluntary benefits can be used to help soften that blow” if they are offered on a post-tax basis.

But voluntary benefits can also be used for other means. They open the opportunity to develop quality communication materials and promote wellness initiatives during open enrollment, said Mike Meredith, Boca Raton, Florida-based executive vice president at Willis North America Inc.

Oftentimes a portion of the commissions earned by voluntary benefit brokers can be used to design “high-quality communications,” Mr. Meredith said. Those communications reminding people of their options and participating in wellness and disease management programs can be “baked into the open enrollment process,” he said.

Enrollment in voluntary benefits can also be used to “clean up eligibility data” to ensure employers are not paying for ineligible workers, spouses or dependents, Mr. Meredith said.

Few companies have the resources to run an audit internally, as it costs money to outsource a firm to do it, but it can be paid for again by voluntary benefit commissions, he said.

Janet Wincko, Tamarac, Florida-based vice president of human resources with retailer City Furniture Inc., said during the conference that voluntary benefits have helped supplement her employees' health plans as the company has shifted from traditional plans, such as the health maintenance organization and preferred provider organization, to a health reimbursement arrangement with a high deductible.

“We have associates saying, "We don't think the coverage is as rich,'” she said.

“By filling in that gap with voluntary benefit plans ... it really does provide them an opportunity to still have some awesome coverage.”

When City Furniture began offering voluntary benefits, it started with accident, cancer and hospitalization coverage, Ms. Wincko said. The company now offers legal services to its employees and is considering pet insurance.

City Furniture uses focus groups and feedback sessions to determine what employees want in terms of voluntary benefits, Ms. Wincko said.

But even while becoming more popular, the voluntary benefits available are changing, said Robert Shestack, executive vice president and voluntary benefits practice leader with AmWINS Group Benefits Inc., a unit of AmWINS Group Inc.

More traditional products such as dental, vision and long- and short-term disability, which were once employer-paid, are now being offered on a voluntary basis because of rising costs and health care reform, Mr. Shestack said.

Options are also growing. Employers can choose between home warranty programs, cyber and personal security coverage, telemedicine, unemployment gap insurance and programs to assist with the worker's estate, he said.

Many benefits experts recommend a multiyear strategy for offering voluntary benefits. Mr. Meredith of Willis suggested starting with critical illness coverage and additional life insurance before branching out into less traditional voluntary benefits.

The key, he said, is to make sure the voluntary offerings are complementary to the base plan and not redundant.

It's also important to ensure employees understand what's available.

“It's amazing to me that employers will spend in aggregate billions of dollars offering employee benefits and some are afraid to spend, you know, 50 cents communicating,” Mr. Meredith said.

“One of the biggest things that we've learned is as much as we think we over-communicate, the reality is we don't,” said City Furniture's Ms. Wincko, whose company communicates to employees through a company intranet, email, newsletters and mail sent to their homes. City Furniture is also looking into social media as a way to reach younger workers, she said.