Voluntary benefits is one of the fastest growing segments in the employee benefits business.
With rising healthcare costs and healthcare reform initiatives, many employers have opted to reduce the amount of coverage they make available to employees.
At the same time, more Americans are taking charge of their health and financial well-being than ever before - seeking coverage that fits their specific needs.
Voluntery benefit programs help employers fill the gaps created when balancing costs with providing the coverage options required to retain key employees - and build great businesses.
Then...there are the Millennials.
According to LifeHealthPro, employers are increasingly offering voluntary benefits packages as a cost-saving measure.
Educating employees - especially those in the Millennial generation - of these benefits is a priority for brokers and employers.
Still, a negative side effect of shifting traditionally employer-paid benefits, including long-term disability insurance, to employees as a voluntary offering is that employees can choose not to elect coverage and work through a disabling illness or injury.
Unfortunately, this can translate into lost productivity and increased health care costs. This is true moreso for the Millennial generation, many of whom feel they are invincible to injury or illness and are not swayed by the lure of dental insurance, longterm disability insurance (LTD), vision care or accident insurance.
In reality, according to LifeHealthPro, these “invincibles” are prone to the same types of serious injuries and illnesses as their Generation X and Baby Boomer colleagues. In fact, some of the top claims among this group include:
- Mental health diagnoses
- Musculoskeletal disorders
Consider the possibilities for an employee - of any age - who becomes disabled and does not have voluntary LTD coverage:
- He or she can take a leave of absence from work and submit a Social Security Disability Insurance claim. The chances of receiving SSDI benefits are low, however, as 65 percent of initial claims were denied in 2012, according to Social Security Administration data.
- He or she can continue working through the illness or injury as long as possible.
With such low approval for SSDI claims, many employees without disability coverage choose to stay at work and work through their illness or injury because they don’t have an income-replacement safety net. This phenomenon, called presenteeism, is productivity loss associated with employees working through medical conditions. This can cause a major drain on an employer’s bottom line, according to BenefitsPro.
There are many ways presenteeism can hurt a workplace:
- Employees working slower than normal
- Employers needing to find replacement employees
- Employers needing to train new employees on job functions
- Changes in product or service quality
- Overtime for other employees
The Millennials Mindset & Voluntary Benefits
While many employers might view presenteeism as something that affects older employees, young workers also are at risk. One in four of today’s 20-year-olds will become disabled before they retire, according to the Social Security Administration. In December 2012, more than 2.5 million disabled workers were in their 20s, 30s and 40s, based on Pew Research numbers.
Millennials are entering the workforce with big demands and high expectations, according to Deloitte’s annual Millennial (Generation Y) survey. Per the survey, Millennials will make up about 75 percent of the global workforce by 2025. Compared to prior generations, this growing demographic has very different perceptions about the work place, especially when it comes to company culture and benefits.
Currently, Baby Boomers are generally the ones in the top positions of companies, and many are contemplating retiring. According to the AARP, they make up 38 percent of the workforce. The middle generation is Generation X, which has a distinctly individualistic outlook.
The U.S. Bureau of Labor Statistics reports that members of Generation X make up one-third of the workforce. The youngest employees in the workforce are the Millennials, also referred to as Generation Y. They have high expectations when it comes to promotions and recognition.
In order to attract and retain Millennials, companies must implement innovative strategies and adopt programs to meet the needs of this growing demographic. Traditional benefits programs are not enough. Millennials are looking for benefits that align with their immediate concerns. They are also looking for information.
It seems Millennials may not adopt voluntary benefits because they do not fully understand them. And in fact, MetLife’s most recent study found 53 percent of all employees say they’d like more help understanding their benefits.
What does this suggest?
Today's brokers and advisers should take the opportunity to teach employees about voluntary benefits by focusing on the benefit, eliminating barriers to entry and emphasize that they’re educating, not selling, Millennials on their product. Millennials want simple decision tools to help understand disability benefits and determine coverage needs, competitively priced premiums for desired coverage, convenient payroll deductions - and mobile accessible platforms for 24/7 engagement.
Keep in mind, Millennials (born 1980 to 2000) tend to value professional fulfillment over salary. They expect rapid promotion and meaningful work or they’ll seek other opportunities. They often juggle many jobs and move among employers frequently. The average Millennial has $29,000 in student loan debt.
Not surprisingly, they are more worried about getting rid of debt or incurring additional debt than their day-to-day expenses. Their needs include portable benefits, forced savings, financial education and concierge services.
Voluntary benefits that appeal to Millennials include employee purchase programs, discount programs, wellness programs and others suited to their stage in life. Studies show Millennial employees care a great deal about their overall health and wellness, but feel unprepared when it comes to their medical protections.
Health insurance, health-related voluntary benefits and wellness programs do appeal to today's smartphone savvy, rapid tweeting, instagramming Millennials - it's all in how this fast-paced, mobile-dependant generation is engaged in understanding voluntary benefits that makes all the difference.