The Affordable Care Act has survived multiple kill attempts and remains a polarizing piece of legislation — except, possibly, among purveyors of voluntary benefits. Nearly eight years after the ACA’s enactment, voluntary carriers still attribute their ongoing rapid growth to the continuing impact of that law.
“The ACA put supplemental health benefits in the fast lane,” says Gene Lanzoni, an assistant vice president with responsibility for thought leadership in The Guardian’s group worksite unit. LIMRA research suggests that 40% of employers say bolstering their current voluntary offerings is a priority, he says.
Guardian itself has been in the fast lane in terms of voluntary product sales growth. It is the largest voluntary player in EBN’s fastest-growing ancillary carriers ranking.
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It is focused on companies with at least 10% growth. Plan sponsors include this information in Form 5500 Schedule A data they submit to the Department of Labor. Note: Groups under 100 lives, government entities and church plans are not required to file, and any disclosure on Schedule C’s are not included in these numbers.
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The voluntary market is booming, research confirms. According to Eastbridge Consulting Group, voluntary sales grew 7% from 2015 to 2016 with dental, hospital indemnity, and life and disability being among the hottest categories.
Branding power
EyeMed Vision Care and three Delta Dental plans were the only benefit providers referred to as “ancillary” benefit plans that by tradition are more heavily subsidized than products like CI and accident insurance.
EyeMed’s growth rate clocked in at 33%, placing it at the No. 3 spot on the list.
EyeMed CEO Lukas Ruecker attributes much of the company’s growth to a focus on the ease of the customer experience and price transparency.
“We like to challenge the status quo,” he says. For example, the company has been deploying an online tool akin to OpenTable that enables users to input parameters for the type of vision service, lens or frame they are looking for, and the system will identify appropriate providers within the closest geographic proximity. It also allows them to book appointments.
EyeMed’s transparency tool gives users an estimate of what they should expect to pay based on their parameters, so they can ask informed questions before buying if the provider quotes prices that turn out to be significantly higher.
The company also facilitates direct communication between an employee’s eye care provider and other medical providers (within the Anthem network) so that medical professionals can tag team treatment for conditions, such as diabetes, that may be evident and to some extent addressable by all of them.
“Anthem could say to the optometrist, ‘Please ask the patient to enroll in a diabetes program,’” Ruecker says.
Tapped out
Employees expect to be tapped out, thanks to high deductibles in their health plans if they or family members land in the hospital. As a result, they see hospital indemnity plans as a smart way to ensure they will have a cash infusion to keep themselves afloat should a medical disaster strike, experts suggest.
Beyond the intrinsic appeal of the coverage itself, Lanzoni believes part of the rapid growth of such voluntary products can be attributed to the influx of brokers looking to expand their horizons after seeing their small employer health plan business shrinking post-ACA.
Lanzoni emphasizes the importance of thinking though an effective enrollment strategy as the first step in generating employee acceptance. John Stanley, Transamerica Life’s managing director for employee benefits, underscores the point. “Having a spot on the shelf is nice,” he says, “but we need employer support” in order to connect with employees.
Brokers share their go-to supplemental sales partners, including Aflac and Unum, in EBA’s annual VB survey.
Transamerica experienced a 25% leap in voluntary premiums last year with a full range of products, according to the miEdge tabulation.
Strict attention must be paid to the fundamentals of communication, education and tools that help employees easily determine “whether this makes sense for me,” Stanley says.
“Technology is changing the way employees are engaging with the market,” he adds. This, in turn, could account for some of the growth in voluntary sales.
Streamlining implementation
For its part, Transamerica is trying to streamline the entire implementation process. Transamerica’s “express plan solution,” with fewer bells and whistles in the product offering, “reduces turnaround time significantly,” Stanley says.
Although term and permanent life insurance have been a staple of voluntary offerings since the beginning, increasingly flexible insurance policies is contributing to uptake rates. That’s particularly true with permanent life policies that give policyholders more choices about how they can access accumulated cash value.
For example, living benefit riders enable insureds with terminal illnesses to tap into some of what otherwise would come in the form of a death benefit in advance to help with medical costs. Such a feature could allow a life policy to serve a similar purpose as a CI policy.
Liberty Mutual, another large carrier that made the top 13 list, only recently (in July 2016) expanded its voluntary menu from life and disability income insurance to include critical illness, hospital indemnity and accident insurance.
The company, whose traditional group product customer base consists of large employers, also decided to reach out to companies with 50-500 employees.
Although Liberty is hardly the first player to “discover” the smaller employer market, “we still see a lot of market growth ahead,” says Daniel Lyons, a senior vice president and manager of employer distribution for the company.
Expanding the offering “was a very logical step that complements our focus on enhancing financial wellbeing and helping employees bridge the gap” between their savings and the funds they would need to cover a major medical event, Lyons adds.
Liberty Mutual’s rapid sales growth in the voluntary space may have been fueled to some degree by the name recognition the company has through its aggressive consumer advertising for its auto and homeowners insurance — products that are also available on a voluntary platform.
Meanwhile, Guardian had $143 million in voluntary revenue growth over a recent 12-month period, representing an 11% gain, according to the ranking.
And while any double-digit growth rate is impressive, that pace was actually the lowest of the 13 carriers on the list. However, meteoric growth is harder to achieve for a large player than a relatively small one.
The primary products propelling voluntary growth at Guardian are its critical illness and hospital indemnity plans, with cancer insurance also in the running. CI premiums have grown at a 15% compound average rate over the past four years, Lanzoni says.
