There are unfortunate realities about the role of traditional health insurance in the United States.
Premiums paid for health insurance have consistently increased by more than 5% in recent years. The average deductible, as a percentage of the American family income, increased from 2.7% to 4.7% between 2008 and 2018. Together, premiums and deductibles comprised over 11% of median income in the United States in 2018.
For a sense of relativity, the famous “Rule of 28” is a financial wellness mantra that consumers should endeavor, traditionally, to spend up to 28% of their gross annual income on their mortgage payments. At this rate, within the next decade, American families could be spending half as much of that on health insurance before their health insurance company begins paying $1.00 towards their healthcare.
As we have witnessed in many industries since the turn of the century, with enough respect and understanding of the status quo, technology can be a source of improvement for consumer health and financial wellness. Specifically, in this case — technology and innovation have provided all of us a fresh perspective around voluntary benefits.
Voluntary benefits, such as accident, critical illness, hospital indemnity, pet insurance, and to a lesser extent, identity theft protection, have emerged as a way to combat rising deductibles and put dollars back into consumers’ pockets.
Voluntary benefits help families protect themselves against unforeseen and even disastrous events — providing families with much needed financial support when they incur costly medical bills for these types of events. However, voluntary benefits not only support the consumer but give advantages to many different players within the benefits ecosystem.
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A recent BenefitFocus study found that employers could see a reduction in employee turnover of up to 8% when employees are enrolled in at least one of five benefit categories. Companies with a predominately millennial workforce could reduce employee turnover by up to 24%.
According to theWork Institute 2019 Retention Report, the cost of losing a US worker is $15,000. With that in mind, an employer with more than 10,000 employees could save $1.2 million for every 10% increase in voluntary benefits participation, Benefitfocus said.
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In many instances, these voluntary benefit plans can offset thousands of dollars of medical expenses — especially those that are a result of hospitalizations. Yet, in some instances, the promise and potential of voluntary benefits has largely gone underappreciated or even unnoticed.
Many employers experience very low voluntary benefit participation, due to the fact that most employees don’t understand the relevance of voluntary benefits to their lives and financial situations. This lack of participation increases costs for those that do engage — while also reducing solutions when unforeseen events occur. Yet, we know the market can do better as a greater percentage of employees engage in disability, life and other types of insurance.
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The use of AI-driven solutions to demonstrate the value of the products in analyzing consumer relevance is providing new opportunities to consumerize voluntary benefits as millennials and others have become used to in different markets.
As we look ahead to voluntary benefits engagement and participation, the new market is providing opportunities to HR leaders, consultants and insurance companies. Leveraging value-added solutions, to help with proactive care management, broad-based discounts and claims assistance with major medical products, allows voluntary benefit ecosystem players to provide services beyond moments of unforeseen incidents. By doing so, HR leaders, consultants, and insurance companies can drive greater participation, retention and affinity within consumer markets.
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The post-pandemic age of healthcare and insurance is approaching; in some ways, it will be unlike any era prior. Innovative players within the voluntary benefits space can redefine consumer experiences in ways that will drive greater adoption and appreciation from a market in need.
