The State of Group Voluntary Benefits

Transcription

1 Seventh Annual Study of Employee Benefits Today & Beyond The State of Group Voluntary Benefits The Prudential Insurance Company of America (Prudential) 751 Broad Street, Newark, NJ

2 Brokers are very optimistic about the future of voluntary benefits. Brokers say they are expecting the demand for voluntary benefits (i.e., 100% employee-paid coverages) to increase over the next five years more than they have in the past. Some employers say that the state of the economy will lead to an increase in participation (27%) in voluntary benefits, but not nearly as much as the brokers. Forty-four percent of brokers expect participation to grow, a 10 percentage point increase over last year. This could be due to the fact that brokers are seeing a bigger shift to voluntary coverages and the addition of new programs as a result of keeping health care costs down especially in the wake of health care reform. Brokers currently selling voluntary products say they are expecting demand to increase % 44 % 52 % All brokers see the adoption rate of various voluntary products to increase with their clients Critical illness insurance Long-term care insurance Accident insurance Long-term disability insurance Short-term disability insurance Dental insurance Life insurance Vision insurance 41 % 32 % 31 % 30 % 28 % 27 % 25 % AD&D insurance 17 % Increase Stay the same Decrease n The largest increases in adoption came with critical illness insurance (41% believe it will increase), long-term care insurance (32%), and then accident and long-term disability insurance (31% and 30%, respectively). 2 I Seventh Annual Study of Employee Benefits: Today & Beyond

3 Brokers currently selling voluntary products believe that the state of the economy will lead to an increase in participation % 34 % 44 % Employees see the value of voluntary benefits and are more interested in having access to them. Employees saying that their employer offers at least one voluntary benefit increased by three percent (85% in 2011; 88% in 2012). Twelve percent of employees say that their employer does not offer them any voluntary benefits, a decrease from last year (15% in 2011). Sixty-three percent of those employees who say that their employer offers at least one voluntary benefit agree that voluntary benefits increase the value of their company s benefits program. There was a 10 percentage point increase from last year in employees saying that they are interested in receiving more voluntary benefits through their employer. Voluntary benefits increase the value of a company s benefits program Agree Disagree 27 % 63 % Employees say they are interested in receiving more voluntary benefits through their employer % 34 % The State of Voluntary Benefits I 3

4 Participation in voluntary products has grown, but gaps remain. The top four voluntary benefits employees are offered through work and are currently enrolled in are: dental insurance; life insurance; vision coverage; and disability insurance. Critical illness and accident insurance were the products employees were most likely to say their employers do not offer (42% and 40%, respectively). Similarly, critical illness and accident are two of the top products that employers say they do not offer. Life insurance is more likely to be offered at no cost to the employee (38%), meaning that if no voluntary plan is in place, employees may be underinsured or worse, uninsured. Most popular voluntary benefits offered and participation employee perspective Dental insurance Life insurance Vision insurance Disability insurance AD&D insurance Long-term care insurance Accident insurance Critical illness insurance 22 % 20 % 12 % 38 % 65 % 61 % 53 % 50 % n Critical illness and accident insurance are products that employees cited as being not sure if they were part of their employee benefits package (27% critical illness and 21% accident). n Long-term care insurance also fell into this don t know category with 22%. This could be due to employees not receiving enough communication or education regarding their worksite benefits. of employers only offer long-term disability, long-term care, accident, and critical illness as voluntary products. Most popular voluntary benefits offered employer perspective Medical insurance 4 % Dental insurance 13 % Life insurance 14 % Short-term disability insurance 17 % Vision insurance 16 % Long-term disability insurance AD&D insurance 18 % Long-term care insurance Accident insurance Critical illness insurance I Seventh Annual Study of Employee Benefits: Today & Beyond

5 Cost, convenience, and competitiveness are the top three advantages for employers. According to employers, lower cost of some benefits was cited as the top advantage; while convenience of payroll deductions and maintain competitiveness of benefits program with little/no cost round out the top three. Guaranteed issue came in a distant fourth. n Forty percent of employers strongly agree that offering voluntary benefits has had a positive impact on their employees satisfaction with their benefits program. n The South (6%) and West (5%) regions were much more likely than the Midwest (0%) to believe that there are no advantages to voluntary benefits. Advantages of offering voluntary benefits 67 % Lower cost of some benefits 59 % Convenient (pay via payroll deductions) % Maintain competitiveness of benefits 52 program with little or no cost 36 % Guaranteed issue 4 % No advantages 40 % of employers strongly agree that offering voluntary benefits has had a positive impact on their employees satisfaction with their benefits program. The State of Voluntary Benefits I 5

6 Employees cite cost and guaranteed issue as major advantages. Over half of employees surveyed say cost and guaranteed issue are major advantages, with convenience through payroll deduction coming in close behind at 48%. One in three employees say that losing their voluntary benefits would be disruptive and expensive. Two-fifths or more consider all items asked about to be major advantages of voluntary benefits. These benefits also boost their impressions of their employer; over one in four (26%) feel that these benefits demonstrate that my employer has my interests at heart and cares about my well-being. 1 in 3 n Employees say that losing their voluntary benefits would be disruptive and expensive. n Employees who say this were more likely to be over the age of 50. Top major advantages according to employers Lower cost of some benefits Can enroll without medical exam or evidence of insurability Convenient (pay through payroll deduction) Access to a wider range of benefits Employer endorsement 52 % 52 % 48 % 47 % 43 % Younger employees (under 30) are less likely to see the advantage of having access to a wider array of benefits. Better service because of employer influence 39 % Major advantage Minor advantage Not an advantage Don t know Age, gender, and education level impact employee opinions of voluntary benefits. Older employees (60+) are more likely to feel that voluntary benefits offer major advantages, especially when it comes to guaranteed issue. Fifty-six percent of post-graduates agree that voluntary benefits give you access to a wider range of useful benefits than might not otherwise be available to you, which was significantly higher than employees with some college (44%) and high school graduates (45%). Women were more likely than men to say that voluntary benefits are convenient because you pay for them through payroll deduction (53% versus 45%). Women again were significantly higher when asked: your employer has done the research and shopping for you, and endorses the options that you have available (women (48%) versus men (39%)). 6 I Seventh Annual Study of Employee Benefits: Today & Beyond

7 Employee opinions on voluntary benefits Voluntary benefits often cost less than if you purchase the same benefits outside the 52 % workplace n Significantly higher among post-graduates (65%) versus some college (52%), college graduates (50%), and high school graduates (45%). You can enroll in voluntary benefits without going through a medical exam or providing 52 % other evidence of insurability n Significantly higher among ages 60 and older (62%) versus ages 30 to 39 (47%). Voluntary benefits are convenient because you pay for them through 48 % payroll deduction n Significantly higher among women (53%) versus men (45%). 47 % otherwise be available to you Voluntary benefits give you access to a wider range of useful benefits than might not n Significantly higher among post-grad (56%) versus some college (44%) and high school graduates (45%). Your employer has done the research and shopping for you, and endorses the options that 43 % you have available n Significantly higher among women (48%) versus men (39%) and significantly higher among ages 40 to 59 (47%) versus ages 22 to 39 (35%). Service is better because of the relationship/influence your employer has with the 39 % benefits provider n Significantly higher among ages 40 to 59 (42%) versus ages 22 to 39 (31%). Carrier brand name is growing in importance. For brokers, employers, and employees, the benefits carrier name has grown in importance with brokers having the most significant increase year over year (up from 78% from 2011). Forty-two percent of employees who reported only receiving one voluntary benefit through their employer say they know the name of the insurance company up from 35% in Brokers Employers Up from 78% in 2011 Up from 59% in 2011 Employees 66 % Up from 51% in % 88 % The State of Voluntary Benefits I 7

8 Methodology The Seventh Annual Study of Employee Benefits: Today & Beyond was fielded via the Internet during July 2012* and consists of three distinct surveys: one among employers, another among employees, and the third among group employee benefits brokers and consultants. This enabled us to compare and contrast opinions of these groups on key benefits issues. This year s study was conducted for Prudential by the Center for Strategy Research, an independent market research firm based in Boston. Overview of Employer Survey Employer results are based on a national survey of 1,000 employee benefits decision-makers. Respondents included business executives, business owners, human resources professionals, and financial management professionals. The survey sample covers all industries, including government, and is nationally representative of all U.S. businesses with at least 25 full-time, benefits-eligible employees. Data shown in this report is weighted to reflect the actual proportion of U.S. businesses by company size, industry, and region based on data from the U.S. Census Bureau. The margin of error is +/- 3.0% at the 95% confidence level. Below is a breakdown of survey respondents by survey participant region, job function, industry, company size, approximate 2011 sales, years in business, and business ownership. Overview of Employee Survey Employee results are based on surveys conducted among 1,011 employees, ages 22 or older, who work full-time for a company with at least 25 employees. The survey of employees was conducted during the same time period as the plan sponsor and broker surveys. The survey sample is nationally representative of all U.S. workers at companies with at least 25 full-time employees. Data shown in this report is weighted to reflect the actual proportion of U.S. workers by gender, region, race and ethnicity, education level, household income, and age based on data from the Bureau of Labor Statistics and the U.S. Census Bureau. The margin of error is +/- 3.0% at the 95% confidence level. Below is a breakdown of survey respondents by region, age, household income, racial and ethnic background, gender, education level, as well as employer industry and size. Overview of Broker Survey As in 2010 and 2011, we engaged leading employee benefits brokers and consultants to participate in this year s study to help provide a clearer picture of the current and future trends and issues facing the industry. Broker results are based on surveys conducted among 603 group employee brokers/consultants. The survey of group employee brokers/consultants was conducted during the same time period as the employer and employee surveys. The margin of error is +/- 4.0% at the 95% confidence level. Below is a breakdown of survey respondents by size of firm, size of clients served, region, age, gender, years in employee benefits, and top employer industries. * Exact field dates are as follows: Employer July 11 to July 27, 2012; Employee July 18 to July 30, 2012; and Broker July 17 to August 1, I Seventh Annual Study of Employee Benefits: Today & Beyond

9 Bring Your Challenges Prudential has been underwriting group insurance plans since Today our Group Insurance business is the nation s second-largest group life carrier, with almost 13,000 group life, 5,800 long-term disability, and 4,200 short-term disability clients insuring more than 20 million employees and their families. 1 At Prudential Group Insurance, we understand the challenges employers face delivering cost-effective, competitive benefits. We offer a full range of company-paid and voluntary coverages, including group life, long-term and short-term group disability, corporate- and trust-owned life insurance, and retiree solutions. Contact your Prudential representative or visit for more information. Bring Your Challenges I 9

10 1 LIMRA, 2011 Annual Surveys of US Group Life and Group Disability Insurance. Group Insurance coverage is issued by The Prudential Insurance Company of America, 751 Broad Street, Newark, NJ Prudential, the Prudential logo, the Rock symbol, and Bring Your Challenges are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide