1. The Appeal of
Voluntary Insurance With
the Nursing Workforce
American Family Life Assurance Company of Columbus (Aflac)
Worldwide Headquarters • Columbus, Georgia
M1428 12/08

2. The Appeal of
Voluntary Insurance
With the Nursing
Workforce
The growing shortage of nurses makes it more important
than ever for hospitals to find new ways to retain and recruit
staff. Solutions and measures to respond to the shortage are
typically costly and difficult to implement.
New Medicare reimbursement rules for hospital-acquired conditions add to the
employer’s need to be a highly competitive and attractive player in the job market.
A recent survey1 of hospital nurses provides new insight into the picture of
the employer of choice. Beyond the basic must haves—strong compensation,
base benefits, and job satisfaction—nurses want voluntary insurance from their
employers. Supporting these findings is a separate study2 in which health care
benefit decision-makers agreed that this type of benefit positions hospitals
competitively.
The results of the nurse survey make a compelling case for providing voluntary
insurance as an employee benefit. Voluntary insurance is equally attractive to
employers because it is available at no direct cost to the hospital and offers
potential tax savings when made available through a Section 125 Cafeteria
Plan. It also serves as a complement to existing benefits and is designed for easy
implementation.
Nurses now impact top-line revenue.
The impact of the growing nurse shortage is measured in the costs associated with
increasing wages, bonuses, benefits, recruiting costs, and steep fees for contract
nursing staff. But as the crisis worsens, hospitals will face another financial sting—
decreasing revenue. The revenue impact comes on two fronts—Medicare’s pay-for-
performance reforms and the public availability of quality-of-care data.
With the October 1, 2008, implementation
of Medicare’s reimbursement policies for
hospital-acquired conditions, nurses will One-in-three nurses would
have a direct impact on revenue. They play a consider a job change for the
significant role in the prevention of the eight following voluntary insurance
medical conditions identified in the first and
policies:
future phases of the program.
With broadening publication of quality-of- Short-Term Disability
care data, nurses will also influence the ability Dental
of hospitals to attract patients, particularly Critical Illness
those seeking lucrative elective procedures.
Long-Term Care
Measures of patient satisfaction now made
available to the public will have a profound Vision
impact on decisions future patients make when Life
choosing a hospital. Accident
Hospital Indemnity
While the critical role of the registered nurse
is well documented, the relationship between Cancer/Specified-Disease
nurses and revenue is now even stronger. The
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3. The Appeal of
Voluntary Insurance
With the Nursing
Workforce
What is Voluntary Insurance? current responses to the nursing shortage include top-of-the-line compensation
and benefits, flexible schedules, changes in work environment and structure to
improve engagement, recruiting foreign nurses, and incentives to attract more
Voluntary insurance, also
teachers to nursing schools. All carry significant hard dollar costs and many will
called supplemental coverage, take time before their impact is felt.
represents an assortment
of insurance policies made Voluntary plans attract and retain nurses.
available to and paid for by Nurses rank cash compensation and major medical benefits among the must
employees as a voluntary option haves when evaluating an employer, and add to that list the opportunity for less
through an employer-sponsored administrative work in favor of more direct patient care.3
benefit plan. These plans
Competitiveness in these areas is a requirement. But with third-party reimburse-
provide a menu of coverage ments shrinking and the cost of providing major medical benefits on the rise,
that enhances an employer’s most hospitals are stretched to their budgetary limits. The ability to enhance
major medical plan and competitiveness with cash compensation and major medical benefits is reaching
other core benefits. Voluntary its ceiling.
insurance has no direct cost Voluntary insurance policies, however, provide an additional means to enhance
to employers—100 percent competitiveness. These plans—including short-term disability, life, accident,
of the premium is paid for by cancer, specified health event, and others—are individual policies with premiums
the employee, usually through paid by employees, typically through payroll deduction. (See sidebar titled What
Is Voluntary Insurance?)
payroll deduction. This coverage
allows employees flexibility by A recent survey of registered nurses working in hospitals indicates these benefits
providing them with access are moving into the must have category. (See sidebar The Nurses Study.) The
to a wide range of insurance survey confirms that nurses expect a strong benefits package, but also reveals
that they consider the addition of voluntary insurance a tangible improvement.
plans in their benefits package. More than half of nurses surveyed would consider switching jobs for benefits that
Typical voluntary choices include include voluntary insurance.
short-term disability, accident,
life, cancer, and hospital More than half of hospitals currently provide voluntary insurance, and the
majority of nurses apply for voluntary coverage.2 Nurses might not consider an
confinement indemnity plans.
employer that does not provide voluntary coverage—96 percent who currently
have voluntary insurance say it is an important factor when evaluating a current
or potential employer.1 Nearly as many nurses without voluntary plans feel
similarly.
Nurses are four times more likely to apply for voluntary coverage than consumers
in general.4 More than half have at least one plan, with life and short-term
disability being the most popular choices. In addition to those plans, accident,
long-term care, cancer/specified-disease, and specified health event are the
policies nurses want to hear about at work.
A recent LIMRA study indicates that more than 50 percent of hospital benefits
decision-makers believe they lost top recruits who went elsewhere for benefits
perceived as better.5 Given the strong appeal to nurses, voluntary insurance has
become an important part of a hospital’s strategy to recruit and retain nurses. A
single insight from the nurse study drives this point home—8 of 10 nurses prefer
to work for an employer that provides voluntary insurance.
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4. The Appeal of
Voluntary Insurance
With the Nursing
Workforce
Health care human resources decision-makers believe
Highlights of the Survey1
voluntary insurance helps.
• Eight of ten nurses prefer to work for Many HR decision-makers in the health care industry would not be surprised
an employer that provides voluntary to learn of the value and strong appeal that voluntary coverage has for its
insurance. largest and most challenging employee segments. The majority believe that
• More than half of all nurses would voluntary insurance helps recruit good talent.5 For those who provide voluntary
consider switching jobs for benefits coverage, decision-makers agree—by a margin of 2 to 1—that they feel more
that include voluntary insurance. competitive.5
• More than half of hospitals make
voluntary plans available. There are other reasons to consider voluntary insurance.
• Nurses are four times more likely to The appeal of voluntary insurance to nurses is reason enough to include these
apply for voluntary coverage than plans in the hospital benefits package. But there are other, similarly compelling
consumers in general. reasons to include this coverage.
• Four of five health care benefits decision-makers agree that voluntary plans
are a cost-effective way to provide a wider array of benefits to employees.5
The Nurse Survey Voluntary insurance has no direct cost to the hospital since all premiums are
paid by employees on a voluntary basis, typically through payroll deduction.
StrategyOne, an independent research
firm in Atlanta, conducted the • Most voluntary plan premiums can be paid pre-tax, offering potential tax
proprietary study on behalf of Aflac savings for both the hospital and employees. Premiums paid through a
in July 2008. The survey explored the Section 125 Cafeteria Plan reduce the total wage base used to calculate FICA
awareness, availability, and importance taxes and other expenses paid on the basis of employee wages.
of voluntary insurance to nurses across • More than 70 percent of health care benefits decision-makers agree that
the country. The sample included 250 voluntary insurance will help contain costs.5 As hospitals look for strategies
registered nurses currently employed in to control escalating major medical premiums, many must increase out-of-
hospitals around the country. The results pocket expenses for employees. Voluntary plans can help with some of these
for the total sample have a margin of expenses for employees, reducing the negative impact of these charges.
error of ± 6.1 percent at the 95 percent • Voluntary coverage can help alleviate presenteeism—the phenomenon
level of confidence. associated with employees who are less focused and productive at work
because of personal concerns. Chief among these are financial concerns.
Nurses have a higher-than-average injury rate,6 and 70 percent worry about
paying for daily living expenses if they are injured on the job. Nearly all
nurses with voluntary coverage agree that it helps give them greater peace of
mind.1
• Voluntary insurance can improve the perception of the overall benefits
package. Twice as many nurses surveyed with voluntary insurance rated their
health insurance as excellent compared to nurses surveyed without voluntary
insurance.1
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5. The Appeal of
Voluntary Insurance
With the Nursing
Workforce
Why Aflac?
When asked which carrier they would prefer for voluntary coverage, Aflac was
the top-ranked provider named by nurses.1 Working with hospitals for nearly
50 years, Aflac is now serving more than one out of every three hospitals7 in
the U.S. With more than 250,000 hospital employees as policyholders7, Aflac
understands their needs.
In addition to a wide range of insurance policies available in all 50 states,
Aflac has more than 70,000 insurance agents/producers prepared to assist with
Voluntary insurance is hospital open enrollments—including second and third shifts. As a recognized
important when choosing an leader in technological innovation, Aflac offers a range of online and automated
services to help benefit administrators with streamlined premium payment
employer.1 and reconciliation. Aflac agents are available to assist with claims, which are
typically processed within four days.7
Nurses with
All voluntary
Conclusion
nurses plans Nurses have made it clear that voluntary coverage is an essential element for
96% recruiting and retention. Hospitals are already maximizing resources to attract
94%
96% and retain nurses. With the financial impact of nurses shifting to the top line,
hospitals will need to identify new ways to establish a competitive advantage as
Percentage agreeing
92% employers.
90%
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or contact your local Aflac agent.
88%
86% 87%
84%
82%
1
Aflac Nurses Survey conducted by StrategyOne, July 5
LIMRA, commissioned by Aflac, “Why Supplemental?”
2008. study, February/March 2008.
2
Aflac Benefits Decision-Maker Study conducted by TNS, 6
Bureau of Labor Statistics, 2006.
December 2007. 7
Aflac data, March 2008.
3
“Health Care at the Crossroads,” Joint Commission on
Accreditation of Healthcare Organizations, 2002.
4
Comparison of response in nurses survey to Aflac
studies in 2006: Consumer Segmentation or Market
Structure.
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