Optional benefits grow, but slowly

Voluntary benefits are enjoying steady, if unspectacular, growth as firms continue to introduce programs that complement their employer-paid benefits packages and strive to offset some of the ill feeling among employees as health care cost increases continue.

At the same time, employers are moving away from a "one-size-fits-all" approach and offering programs that reflect their employee populations--such as concierge services for workers in their 20s and long-term care for those in their 50s.

The most popular voluntary benefits, though, continue to be the standard insurance coverages: auto, homeowners, accidental death and dismemberment, disability, life, dental and vision (see story, page 12).

Interest in voluntary benefits continues to grow, say observers. According to a 2006 MetLife Study of Employee Benefit Trends, 20% of all employers are offering a wider array of voluntary benefits compared with the previous year.

Employers are reviewing what "they already do offer as well as looking to expand it," said Rich Fuerstenberg, a principal with Mercer Health & Benefits in Princeton, N.J. "A lot of that is being fueled by some of the cost pressures in other areas of benefits," he said.

Employers facing higher health care costs are offering voluntary benefits to try to "offset some of the bad taste" created by pushing more health care costs onto employees, said Vincent Ashton, executive director of New York-based HealthPass, a consulting firm that focuses on small companies.

In addition, increased voluntary benefit offerings are part of a growing shift toward health care consumerism, observers say.

Employers are "moving away from a world of entitlement" to one of engagement, where employees are being asked to make selections and pay more "and voluntary benefits are playing a big part in that," said Rick Elliott, Atlanta-based chairman of Willis Benefits, a unit of Willis Group Holdings Ltd.

As recently as six or seven years ago, an employer's attitude towards voluntary benefits might have been, "I don't want to be hassled" by their administration, said Robert Maloney, vp, national affinity sales, with Boston-based Liberty Mutual Insurance Co., which offers auto and homeowners voluntary benefits. Now, though, "it's become a more accepted product line."

And insurers are offering a wider variety of programs, said Charlotte Lazar-Morrison, director of human resources at The Aerospace Corp., of El Segundo, Calif.

Last year, the research and development company began offering its employees a long-term disability policy that can be converted into a long-term care policy, she said. "I think insurance companies are getting creative about the products they're offering to make them interesting to people."

Age appeal

Employers are now offering voluntary benefits that meet their employee population's diverse needs, say experts.

The diversity in today's workforce, with the baby boomers, followed by the "X" and "Y" generations, "is probably greater today in our workforce than ever before, said Lance Osborne, vp, field force development, for the Amercan Family Life Assurance Co. of Columbus, in Columbus, Ga.

"And that creates a need for companies to get creative--in fact, innovative--in their plan designs and their benefit offerings, so you're seeing a lot of companies moving away from this one-size-fits all because, in fact, it doesn't fit at all, and they're looking for opportunities through voluntary products that are more suited to the diverse workforce," Mr. Osborne said.

What appeals to those under the age of 30 and those over 50 "can be very different," said David Downer, a Washington-based vp and senior consultant with The Segal Co.

Employers are "trying to match up to some reasonable degree what each one of those different groups will view as being valuable to them," giving them choice and flexibility, said Mr. Downer.

A 25-year-old, for instance, "is just not interested in buying life insurance, or long-term care," but likes fitness or vacation club discounts and other concierge-type services, while older workers are more interested in long-term care and supplemental insurance for their post-retirement years, said Mr. Downer.

"Those are the kinds of things they find important or valuable, and that's what we're encouraging employer groups to look at," said Mr. Downer.

Voluntary benefits at the Arlington, Va.-based Stanley Associates include life insurance, accidental death and dismemberment, vision and a commuter benefit that includes paying for parking expenses on a tax-free basis, said benefits manager Kara Svehla.

The firm selected its benefits based on informal focus groups formed from among its 2,300 employees, which it used to "find out what our employees are looking for most," said Ms. Svehla. The government consulting firm is also considering adding other voluntary benefits, such as legal services and car, homeowners and pet insurance, she said.