Infographic: Trends in Voluntary Benefits and Services - Towers Watson
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
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
1965 and 1980
1981 and 1999
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
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.
Trends in Voluntary Beneﬁts and Services