Economically challenging times require creative solutions, especially among small and midsize employers who, despite budget constraints, are trying to offer comprehensive benefits packages that adequately protect their workforce.
With the help of brokers and advisers, employers are finding that creative benefits solutions – a strategic mix of employer-sponsored plan designs and added voluntary plans – can close coverage gaps and still be affordable.
The future bodes well for employees’ participation in offerings, considering that the U.S. Commerce Department reports the nation’s savings rate recently spiked to 5% from negative territory over the past few years. Elena Wu, second vice president of group worksite and marketing for The Guardian Life Insurance Company of America, says this is an indication that consumers are making more responsible decisions about their finances.
“If employee benefits are explained clearly and simply so employees understand how they can build their financial protection portfolio through work, then the participation will naturally follow,” says Wu.
Building a benefits package to meet specific company needs requires engagement and active collaboration between brokers and their clients. Here are just a few creative options to consider:
High-deductible health plans (HDHPs) with triple tax savings advantages. HDHPs with higher annual deductibles usually have lower premiums than traditional PPO options, but that doesn’t necessarily translate into a less robust plan. Health savings accounts (HSAs) tied to these plans provide a way for employees to use part of their premium savings to pay for non-covered expenses up to their deductible while saving on taxes in the process.
In some cases it’s possible – and financially advantageous – for employees to build HSA funds beyond their use for immediate health services. Funds earn interest and unused amounts can be rolled over for the future. HSAs offer the advantage of triple tax savings: contributions are not taxed, interest earned is not subject to tax, and withdrawals aren’t taxed as long as they are used for qualified medical expenses. Because employees own their HSA, they have the appealing feature of portability, both their contributions and their employer’s.
Dental plans with tax savings advantages. This philosophy of high-deductible plans and cost savings is spilling over into the dental benefits area. Guardian recently developed a higher deductible plan design that also features higher annual maximums of $3,000 or $5,000. The plan is rounded out with an HSA or FSA component to enable employees to save on taxes while setting aside dollars for non-covered procedures. As a whole, while premiums are lower compared to traditional PPO plans, employees still reap the advantages of a comprehensive plan, including access to one of the largest PPO dental networks.
Critical illness coverage as supplement to medical plan. While some employers are using HDHPs as a way to control medical costs, others are controlling rising medical premiums by scaling back coverage. Adding a group critical illness plan to a package helps keep the offering robust while still enabling employers to save.
Policyholders receive a lump-sum benefit upon diagnosis of leading illnesses, such as heart attack, stroke or cancer, which they can use in any way and without needing to fill out reimbursement forms. This cash infusion is especially helpful toward coping with common expenses encountered when faced with a critical illness, such as out-of-pocket medical costs (i.e., deductibles, copayments, experimental treatments) and indirect costs such as child care expenses or income lost by a loved one because of helping out during the patient’s recovery.
A new generation of critical illness policies covers more than just serious illnesses. Wu says “in recognition that all medical conditions pose financial burdens, in addition to six leading illnesses/events, Guardian provides coverage for extended hospital stays for any other injury or illness.”
Without critical illness coverage, savings or family members are the first places people turn to help with out-of-pocket expenses. Uncertain times highlight more than ever how these backup options are not ideal and how valuable critical illness coverage can be.
Options to automatically increase life insurance amounts. Options to increase coverage without impact to premium are another smart solution in economically challenging times. In mirroring the use of auto-pilot features to maximize the accumulation of 401(k) plan assets, Guardian offers an automatic enrollment option that increases voluntary life insurance coverage amounts 5% a year for 5 years. The increase to the benefit amount has no impact on premium, giving employers a way to build a comprehensive yet affordable plan.
Uncertainty requires reassurance
Perhaps one of the most important issues associated with offering benefits in this economic climate is the need for insurance carriers to be financially solvent and stable. That way, policyholders can rest assured that times won’t be even harder financially because they can rely on their benefits to protect them when they need them most.
As a mutual life insurance company, Guardian isn’t beholden to stockholders and can “focus on the long-term interests of policyholders rather than the short-term demands of Wall Street,” according to Wu, who notes that the carrier’s financial strength led to a recent ratings upgrade in November 2008 by A.M. Best to A++, their highest financial rating.
“It’s important to us that customers know they will continue to enjoy seamless benefits and the quality service that they have come to expect from Guardian and know that they can count on us now and into the future,” she adds.
Financial information concerning The Guardian Life Insurance Company of America as of 12/31/08 on a statutory basis: Admitted Assets = $29.0 Billion; Liabilities = $25.3 Billion (including $22.1 Billion of Reserves); and Surplus = $3.7 Billion.
About the author |
 |
The
Guardian Life Insurance |
