Infographic: Trends in Voluntary Benefits and Services - Towers Watson

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More than 300 organizations shed light on how they design voluntary benefit programs.

More than 300 organizations shed light on how they design voluntary benefit programs.

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  • 1. towerswatson.com As companies rethink employee value propositions (EVPs) and the total rewards mix in today’s health care reform world, VBS will likely play an even greater role in companies of all sizes and industries. Approximately 21% view voluntary benefits as important for 2013, but their enthusiasm more than doubles to 48% for 2018. Most employers plan to take advantage of VBS to enrich existing core benefit plans (83%) and augment the total rewards package (74%). With the excise tax on high-cost core health care plans launching in 2018, they need to control increasing health care costs. VBS offers some opportunities.2013 21% 2018 48% 83% 74% VBS gaining importance over the next five years Designing the VBS product suite Health care reform excise tax challenges Primary reasons companies adopt VBS For employees, the VBS model offers choice, convenience and affordability. They can access an array of options to personalize their benefit package to fit their lifestyles. They can select voluntary products at open enrollment or, in some cases, throughout the year and fund them through payroll deductions. And in many cases, employees pay less when purchasing products in a group-offered model. In designing plans that fit the needs of employees, employers focus on employee demographics (54%) and how products fit within their total rewards (50%) and wellness strategies (44%). VBS can be attractive to employers seeking to balance plan affordability for employees with looming excise tax challenges on high-cost plans. Supplemental medical voluntary benefits offset the reduction in core benefit value by reducing employee out-of-pocket risk. In particular, industries that traditionally offer robust medical plans and experience higher health care expenses, such as the Energy and Utilities sector, need to be most aggressive in reining in costs before the excise tax effective date, January 1, 2018. Employers report that their current VBS offerings are geared slightly more toward older employees. Today, baby boomers represent a large population in the workforce, so meeting their needs is important. However, companies reliant on younger employees should evaluate new VBS models to fit the needs of the Generation X and Y populations as well — by nature, both embrace customized programs. The 6most prevalent VBS offerings include 3 traditional supplemental medical insurance options (vision, dental and accident), 1 traditional wealth (disability), 1 traditional security (life insurance) and 1 personal (discounts/perks). The top emerging VBS offerings under consideration include one wealth option (financial counseling), one supplemental medical option (critical illness) and one security option (identity-theft protection).Born between 1946 and 1964 Baby Boomers Born between 1965 and 1980 Generation X Born between 1981 and 1999 Generation Y Born before 1945 Traditionalists 34% 29% 40% 44% VBS can be introduced as a lower-cost alternative in a high-cost plan, if implemented appropriately. VBS are more geared toward baby boomers today (as noted right), but personalized benefit designs appeal to younger generations. VBSMore employers will turn their attention to Voluntary Benefits and Services (VBS) over the next five years. VBS meet employee needs by addressing concerns across four critical life needs: supplemental health, wealth accumulation, security and unique personal interests or requirements. Supplemental health benefits foster employee and dependent well-being while mitigating risk at a reasonable cost. Wealth products protect income and assets; security products protect survivors, the vulnerable or one’s identity. The final category covering personal products provides convenient access to desired insurance coverages and other services that the employee perceives as personally important. In the spring of 2013, Towers Watson surveyed more than 300 U.S. employers to determine how they use and deliver voluntary programs now and over the next five years. 54% 50% Employee Demographics 44% Wellness Strategies Total Rewards Trends in Voluntary Benefits and Services