The ‘Big Mo’ of Employee Benefits
A winning sports team on a successful run is said to possess “Big Momentum” or “Big Mo” The same concept can be applied to the stock market, entertainers and especially for sales.
In the employee benefits marketplace, voluntary benefits have the wind at their back as they begin to gain more popularity. A study conducted by MassMutual in partnership with BenefitsPro.com in 2016 found that voluntary products were the fastest growing category of employee benefits among benefits brokers, with 21 percent of those who did not currently sell them saying they planned to do so in the near future1.
It shouldn’t be a surprise. There are considerable forces creating momentum for voluntary products, chief among them may be the rising cost of healthcare premiums. The U.S Department of Health and Human Services reported in October 2016 that health care premiums were rising 25 percent in 20172.
Rising costs for healthcare coverage means employers have fewer dollars to spend on other employee benefits. It’s one reason why more employers are making life and disability insurance and other benefits they once paid for available to employees on a voluntary or employee-paid basis only.
High-deductible healthcare plans are also on the rise, requiring employees to pay higher out-of-pocket costs. The Kaiser Family Foundation reports the average annual out-of-pocket costs per patient rose almost 230 percent between 2006 and 20153. The same Kaiser Family Foundation study found employee deductibles on average increased 67 percent from 2010 to 2015.
Those rising healthcare costs may be prompting more workers to look for help from their employee benefits, in many cases from voluntary products such as critical illness (CI) and accident coverage. Critical illness and accident insurance were offered by 50 percent and 48 percent of brokers respectively, the MassMutual/BenefitsPro.com study found, but 14 percent said they planned to sell CI in the near future and 10 said they planned to sell accident insurance. The snowball is rolling downhill fast and accumulating quickly.
Meanwhile, employers are expanding benefit choices, offering employees greater flexibility to select those benefits that best meet their individual needs. The staples of healthcare coverage, like life and disability insurance and retirement savings, are now being complemented by benefits such as critical illness and accident coverages, low-cost loans for financial emergencies, financial planning, tuition reimbursement and college loan repayment assistance, and the ever-popular pet insurance.
Brokers who say they would like to start selling these and other voluntary benefits point out that they are looking for training and education about the regulatory environment, individual products from specific carriers, and tools, according to the MassMutual/BenefitsPro.com study. Those resources are typically available from the top benefits providers, including local wholesaling support.
In speaking with a provider representative, make sure you kick the tires on those issues that most brokers cited in the MassMutual/BenefitsPro.com Benefits Study as being “very important” for success: service (96 percent), advice on lowering benefits costs (82 percent), diversity of products and solutions (73 percent) and consultative guidance and information related to the Affordable Care Act (82 percent). Other resources and support that were most-often mentioned as being very important were regular employee benefits education for workers (63 percent), technology and tools to help employers manage benefits (51 percent) and help employees select and manage their benefits (55 percent).
The data shows that partnering with the right provider may go a long way towards your ability to access the right resources and support to help meet a wider range of needs for your clients and their employees. The demand for voluntary benefits seems to be growing and with it, so can your practice. Can you feel the momentum starting to build?
Jonathan Shuman leads sales of workplace benefits for Massachusetts Mutual Life Insurance Co. (MassMutual).
1MassMutual/BenefitsPro.com Benefits Study, July/August 2016
2 U.S. government says benchmark 2017 Healthcare.gov premiums up 25 percent, Reuters, Oct. 24, 2016, http://www.reuters.com/article/us-usa-healthcare-insurance-idUSKCN12P003
3 2016 Employer Health Benefits Survey, The Henry J. Kaiser Family Foundation, http://kff.org/report-section/ehbs-2016-summary-of-findings/