1. VIEWPOINT
WHY VOLUNTARY INSURANCE?
The real question is, why not? Voluntary insurance plans can resolve a bevy of
market pressures faced by HR and benefits managers today, at no cost to their
companies. As a unique opportunity to satisfy competing priorities, voluntary
insurance programs accomplish the seemingly impossible—help create a more
attractive, benefits package in the face of diminishing budgets, rising health care
costs, and a heated competition for talent.
Voluntary insurance is made available to employees by their employers and is 100 percent employee-paid through payroll
deduction. It can include policies for accident, cancer/specified-disease, dental, life, short-term disability, specified health
event, hospital intensive care, lump sum critical illness, and vision. It is traditionally viewed as coverage that exceeds core
benefits packages, yet as many companies are cutting back on health care coverage to curb rising costs, the need for
voluntary insurance has become essential to many businesses.
Numerous Challenges — One Solution
EMPLOYER IMPACT EMPLOYEE IMPACT SOLUTION
Rising Health Care Costs According to a 2009 survey, Since 1999, family premiums for Voluntary insurance supplements
employers perceive health employer-sponsored insurance core packages at no direct cost
care costs as the number one have increased 120% while to employers and may reduce
challenge to achieving short-term wages have gone up 44% and corporate taxes by cutting FICA
success in todayʼs economic inflation has risen 29%.2 tax contributions.
uncertainty.1
Pressure to contain Controlling health and medical The average annual family Voluntary insurance policies can
expenses means insurance costs is the second premium increased 27% since help employees manage rising
highest priority among 2004, to $12,680 in 2008.4 health care costs by providing
shifting many costs companies today.3 them with cash benefits for
to employees. out-of-pocket medical expenses.
Growing financial One-third of workers are Sixty-two percent of all Employees with voluntary
stress among employees experiencing difficulty paying personal bankruptcies in the insurance coverage are less
off debt, and nearly half (48 U.S. in 2007 were caused by concerned overall with medical
can decrease morale, percent) are so worried that it is health problems.6 finances issues than those
satisfaction, and distracting them from work.5 without voluntary insurance.7
productivity.
Pressure to contain Nearly one-quarter of employers Benefits was ranked as the Among employers, 41 percent
expenses means believe they are more likely to most important factor in terms of say offering voluntary benefits
lose employees to competitors retention for employees.8 is a good way to look after their
shifting many costs with better benefits packages.7 employees, and 40 percent say
to employees. voluntary benefits help increase
employee satisfaction.9
1
“2009 Top Five Total Rewards Priorities,” Deloitte, LLC Survey, 2009; 2“Why Supplemental,” Aflac/RTi Market Research Survey, 2009; 3“Employer Health Benefits,” Kaiser Family
Foundation/KRET Survey, 2008; 4Pierson, B., “Simply Put, Itʼs Good Financial Planning,” Supplemental Disability Insurance, Aug. 2008; 5“Workplace Options survey, February 2009”;
6
“Harvard research study conducted by Drs. David Himmelstein and Steffie Woolhandler of Harvard Medical School, Elizabeth Warren of Harvard Law School, and Deborah Thorne, a
sociology professor at Ohio University, June 2009; 7Small Business “Now More Than Ever” Aflac/Accelerant Research Survey, 2009; 8“Spherion Corporation “Emerging Workforce Study,” 2009;
9
“Why Supplemental,” Aflac/RTi Market Research Survey, 2009.
AFLAC / / VIEW P OINT
IN1139 3/10
2. More than half of the countryʼs employers provide voluntary insurance, tapping into
a remarkably easy way to look after the well-being of their workforce through the following:
CUSTOMIZED BENEFITS PACKAGES – Employees can select coverage relevant to their circumstances and build a benefits
plan tailored to their specific needs.
CASH BENEFITS – Voluntary insurance policies pay benefits regardless of any other health coverage, helping cover
deductibles, copayments, and other unexpected expenses.
MAKE BENEFITS MORE ACCESSIBLE
The cost of health care continues to outpace inflation and household earnings at a pace greater than 2 to 11.1 To reduce the
burden on corporate bottom lines, benefits decision-makers are often forced to pass larger portions of these increases onto
their workforce.
The result, however, is that employees are now faced with some tough decisions, with many resorting to drawing from
personal savings, dipping into retirement accounts, and increasing use of credit—all of which can lead to personal
bankruptcy. When an employee faces financial difficulties, an employer feels the impact as well in the form of decreased job
performance, absenteeism, and dissatisfaction. At the same time, HR managers remain tasked with attracting and retaining
the best employees.
Breaking an Unhealthy Cycle
Voluntary insurance policies help ensure a healthy workforce and a healthy bottom line.
Negative impact
Breaking the Cycle on company’s ability Rising
A new survey found that nearly to compete in the
marketplace and
health care costs
half (48 percent) of workers compete for talent Breaking the Cycle
are so worried about paying Voluntary insurance is no cost4
off debt, that it is distracting and can reduce FICA taxes.
them from work.3
Increase employe
Absenteeism from share of premiums,
work, decrease in job higher deductibles,
performance and out-of-pockets,
less coverage
Breaking the Cycle
Employees without voluntary Employees
insurance are nearly twice as experience financial Breaking the Cycle
likely to skip needed medical tests distress or choose Voluntary insurance pays
of procedures as those with
to forego needed
health care
employees cash benefits to
voluntary insurance coverage.2 defray rising out-of-pocket
costs and unexpected expenses.
Market conditions have created a need for voluntary insurance. Businesses of all sizes and across all industries have
adopted voluntary insurance policies because they help to bring resolution to every component of this complex cycle.
So the question really isnʼt, why voluntary insurance? The question is, why not?
1
“Health Care Costs Outpace Inflation 2 to 1,” The New Journal, June 18, 2008; 2“Consumer Now More Than Ever,” Aflac/Accelerant Research Survey, 2009;
3
“Workplace Options Survey, February 2009”; 4Some businesses may have indirect administrative or other costs.
AF LAC / / V IEW P OINT