While U.S. employers historically embraced employee-pay-all voluntary benefits as a way to boost their benefits offerings without increasing their costs, voluntary benefits are expected to become even more prevalent as employers re-evaluate their benefit strategies in response to the health care reform law.

While the most popular voluntary benefits offerings today are disability, life, vision and accident, gap programs, designed to supplement high-deductible health plans that increase employee out-of-pocket costs, are expected to move to the head of the pack.

Gap programs include critical illness and hospital indemnity, which pay a scheduled benefit to plan members diagnosed with certain conditions or who are hospitalized (see story, page 11).

“Employers are responding to the economic benefits, for both employee and employer, associated with health care consumerism, including wellness programs and consumer-driven high-deductible plans that are becoming increasingly popular as a result of health care reform,” said Mike Thompson, Atlanta-based small and midmarket practice leader at Mercer L.L.C.

“Employers who offer CDHPs are positioning critical illness and hospital indemnity plans as an extension of the CDHP, enhancing the relevance and appeal of these products in conjunction with the overall messaging that CDHPs can be a lower-cost, higher-efficiency form of health care coverage,” Mr. Thompson said.

“Critical illness and hospital indemnity plans are increasingly viewed by employees as gap fillers to their traditional core medical coverage,” he said.

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The percentage of employers that expect voluntary benefits to become very important to their total rewards strategy will more than double over the next five years, according to Towers Watson & Co.'s “2013 Voluntary Benefits and Services Survey” published in August.

The primary reasons companies cited for adopting these voluntary benefit offerings are to provide personalized benefits that fit employees' needs and lifestyles and to enrich their total rewards packages, the survey found.

“As organizations consider new benefit strategies in the post-health care reform environment, they are seeking a delicate balance between providing their employees with a competitive rewards package and not inflating costs,” Mark Bilderback, senior health care consultant at Towers Watson, said in a statement. “We expect more employers to turn their attention to these benefits in the next few years.”

The suppliers of voluntary benefits also are bullish on this market.

Nearly 90% of insurers responding to a recent survey by Avon, Conn.-based Eastbridge Consulting Group Inc., a marketing advisory firm serving insurance and financial services organizations, expect sales of voluntary products to increase in the next 12 months. Reflecting a continuing upward trend, voluntary sales grew 6.6% to $6.03 billion in 2012, up from $5.66 billion in 2011, according to Eastbridge's “U.S. Work Site/Voluntary Sales Report.” This compares with sales of just $4.03 billion a decade ago.

“A lot of brokers are selling these as companion plans to core products,” said Craig Hasday, chief operating officer of Frenkel Benefits L.L.C. in New York. “They are meeting a need. People have real exposure with higher deductibles and copays.”

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They also are helping to replace brokers' lost income as a result of the passage of the Patient Protection and Affordable Care Act, he added. Broker commissions for health benefits have been reduced as a result of the minimum medical loss ratio requirements that insurers must meet under the law, Mr. Hasday said.

“Prior to ACA, the offering of critical illness and accident had been out there for some time. They've always been popular among certain populations: accident with younger workers; critical illness with older workers,” said Bruce Sletten, senior vice president and national practice leader for elective benefits at Aon Hewitt in Dallas. “With employers embracing a defined-contribution approach to benefits, we're seeing an increase in the offering of a high-deductible health plan and employees certainly have a concern over the out-of-pocket risks that exist with one of those programs, so employees are looking to mitigate that risk.”

Dale Alexander, president of Alexander & Co., an insurance brokerage firm based in Woodstock, Ga., specializing in midsize and large educational systems, predicts that “we will see more medical gap or medical bridge policies helping people bridge these higher-deductible plans.”

In addition, he is seeing employers, especially in the middle-market, convert many core benefits, such as short-term disability and long-term disability, into voluntary, employee-pay-all programs.

“You're starting to see voluntary products expand into other areas that once were employer-paid,” Mr. Alexander said.

“The cost of core benefits has gone up and budgets were cut during the recession, and maybe some core benefits are now being offered on a voluntary basis,” said Brian Celiberti, executive director of Crystal & Co. in New York. “Maybe it's dental; maybe it's disability. We do a lot more of that on a voluntary basis than we did years ago.”