In today's changing financial landscape, many companies are finding creative ways to approach the benefits offered to their employees. While many businesses are laying off workers and freezing salaries in an effort to control costs, they also are critically evaluating employee benefits. One of the first places companies are looking at to control costs is their medical plans, where firms feel desperate to find ways to get the most bang for their buck. Companies with self-insured short-term disability plans are finally analyzing what their true claims costs are, which are not what they'd originally projected. Firms are also re-examining even relatively minor items like gym memberships and eye care benefits. In short, virtually every benefit dollar spent is currently under the microscope at businesses large and small.

Your company may find that an "alternative" benefits approach could help control costs. MetLife's sixth annual Employee Benefits Trends Study found that 55% of the 1,652 companies surveyed offered voluntary benefits (VBs), viewing them as a way to retain employees and keep employer costs low. The same study also showed that decision-makers are spending more time examining voluntary benefits to possibly shift some company-paid benefits to voluntary status. In this environment, it's important for decision-makers to become educated on what voluntary benefits programs can really provide. This article offers an introduction to why and how your company may want to offer voluntary benefits, plus tips for selecting the right VBs to offer your employees.

Sobering statistics

The rising cost of health care is a pressing concern for 85% of American adults over the age of 18, according to a poll by the American Society for Quality/Harris Interactive. Higher deductibles are becoming the norm, co-pays are rising, and the cost of medication is skyrocketing. More than one in four U.S. adults has not filled a prescription or has delayed a medical procedure due to expense. Medical costs are just the tip of the iceberg; lurking below the surface is a vast array of uncovered expenses like lost wages, child care and transportation. No wonder people are worried - the threat of unmanageable costs is increasing, with no clear solution in sight.

The reality for the average working family in America is this: If you or your loved ones get sick or hurt, chances are high that the financial burden could be devastating.

Employees are telling their employers, "If you want me to take on more healthcare and insurance costs, I need some help! I need education and access to affordable solutions for my family." The good news is that there are solutions available to help rank-and-file employees weather the financial storm that family illness or accidents can bring.

VBs for retention and employee satisfaction

Companies increasingly see voluntary benefits as an effective tool for boosting employee commitment at little to no cost. Since voluntary benefits are employee-paid, corporate expenses are minimal, yet VBs deliver an immediate, tangible benefit to employees. Once the benefit is set up, there are virtually no ongoing demands on HR staff resources, since claims are administered directly by the carrier.

That doesn't mean these benefits are invisible, though. In small to mid-sized companies, when Joe or Jill has a heart attack, everyone knows about it. A $10,000 critical illness payout within weeks of a diagnosis becomes good news that travels fast. Maybe that's why critical illness coverage is experiencing double-digit growth, and the fastest growth in voluntary benefits has been in income protection targeted benefits.

As the recent MetLife survey shows, employees who feel good about their company's benefit package are much more likely to enjoy their jobs and to feel loyal to their employers. Voluntary benefits have broad appeal. While accident and critical illness insurance are especially important to minimum-wage earners, remember that the most popular benefits in the C-suite are individual disability and supplemental life plans. On both ends of the earning spectrum, there is a common thread: income protection-related coverage is always a valuable voluntary benefit offering.

It's all about the message

The quality of communication determines how your employees feel about their benefits package. Data show that if you are effective at communicating the message - even if your plan is not as comprehensive as that of a comparable employer - employee satisfaction goes up. Conversely, the best benefit package in the world can be an enrollment dud if it's not communicated well.

Voluntary benefits are blissfully simple - and simple to communicate. As with old-fashioned scheduled benefit plans, a specific accident or sickness will trigger a defined benefit payout. And that's it. When employees understand that these products are designed to solve real-life problems like making their bill payments or putting food on the table during a difficult time, enrollment rates soar.

What are voluntary benefits?

Voluntary - or supplemental - benefits include life, accident, critical illness and short-term disability insurance. Premiums are surprisingly affordable, often as little as $3 to $4 per week. When a covered event -- usually an accident or a debilitating illness like heart attack, stroke or cancer -- triggers a claim, the VB policy pays a predetermined lump sum that can be used to cover expenses at the policyholder's discretion. It's simple, clean and direct.

While these products may be available to individuals outside the workplace, the reality is that many of your employees may have neither the time, knowledge nor means to explore these options. Employers can often negotiate better terms - like lower premiums and simplified underwriting - with carriers. While group coverage does exist, most workplace VBs are still written as individual contracts between the employee and the carrier, hence the term "voluntary." The majority of VB policies today are paid through after-tax payroll deductions, and the coverage is portable.

VBs are supplemental

One of the biggest issues facing America's working families during a health crisis isn't the cost of care itself - it's the loss of cash flow that results from being out of work, coupled with uncovered expenses associated with aftercare and treatment. If a family is living paycheck to paycheck, having the primary breadwinner miss a week of work has a significant impact on their financial stability.

VBs offer simple, affordable solutions to very real problems. An average accident policy, for example, costs an employee about $3.75 a week - about the same as a cup of coffee and a doughnut. And the terms are straightforward. If an employee's child falls off the swing set and breaks her wrist, the policy could pay $400 to be used for any purpose. If an employee slips and dislocates a shoulder, the policy could pay $500. Unlike core health and disability benefits, the money from this accident policy can be used to pay anything from uncovered medical costs to household expenses such as a utility bill. For rank and file employees, getting cash in hand during a difficult time is crucial to their financial well-being.

Here's a common scenario: A 49-year-old light manufacturing worker has a heart attack. He's out of work for three weeks, and then goes part-time for a month, with six specialist follow-up visits. Total medical costs are $41,000. Between co-pays, deductibles and lost wages, his out-of-pocket expenditure is about $5,000. For $3.50 a week (via after-tax, payroll deduction), he has purchased a $10,000 critical illness policy. He simply fills out a one-page claim form that pays upon diagnosis. With the $10,000 check, he pays his out-of-pocket medical expenses, covers the mortgage and car payments, and uses the rest to make up for his wife's lost wages on the days she brings him in for treatment.

Note that the critical illness benefit doesn't replace comprehensive health care, but supplements it. That's why these types of benefits are often referred to as "supplemental" coverage.

VBs encourage saving ways

Here's another powerful incentive for making VBs available to your employees: Such benefits may help boost employees' savings rates. Let's face it, many American workers aren't thinking about retirement planning - they're concerned about current cash flow and the "now" issues: What if I get sick? How will we eat? How will I pay the rent? This is particularly true for younger employees or financially strapped families. Voluntary benefits are popular because they address these issues head-on.

According to a recent MetLife survey, 55% of employees feel that payroll deductions for voluntary benefits help them to be more disciplined about saving. This discipline - coupled with the financial safety net the benefits provide, and an integrated education campaign - can translate into increased enrollment in company-sponsored 401(k) plans. At the very least, accident and critical illness insurance might help curb a disturbing new trend: the increasing credit card debt being incurred by participants in high-deductible health plans.

Design options for your demographics

Once you've decided to offer a VB program at your company, where do you start? The products themselves are simple and fairly generic. You probably won't make a mistake going with any of the name carriers. You can, however, match up your company's needs with various product options. Here are some features to put on your checklist:

Choose ROI as your VB partner... We stand and deliver

A successful VB offering is all about communication. The message - and how it's conveyed to employees - is what will make your program successful. The key words here are "empathy" and "education." If you don't hear these words when talking to brokers or carriers, keep looking! Many decision-makers are unaware that some brokers specialize in voluntary programs. The plus here is that they really know the VB business, the carriers, the products, the message, and the process. There are two kinds of VB specialists: large national companies and smaller boutique firms. 

• The national players like ROI are enrollment specialists whose process-driven approach is on administration and enrollment. Using them might make sense if your population is 1,000 employees or more, where economies of scale kick in.
  
• ROI also has Boutique VB specialists focusing exclusively on voluntary benefits. They specialize in the "human touch" - getting the message out, employee education, person-to-person enrollment, claims assistance and communications support. This approach can be especially effective for small to mid-sized companies.

                                                           A win-win solution

ROI provides National Broker capabilities while maintaining that "Boutique" touch..