Top vol­un­tary car­ri­ers

CDHPs, bro­ker pro­mo­tion and stream­lined en­roll­ment prac­tices are all play­ing a role.

Employee Benefit News - - CONTENTS - BY RICHARD STOLZ

Delta Den­tal, EyeMed and Transamer­ica top the rank­ing of work­site ben­e­fit providers.

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.

The rank­ing, cre­ated in part­ner­ship with busi­ness in­tel­li­gence data an­a­lyt­ics firm miEdge, lists the top 13 fastest-grow­ing an­cil­lary ben­e­fit car­ri­ers in the United States. The rank­ing is based on year-over-year growth of each com­pany by fac­tor­ing com­mis­sions paid.

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.

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.

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.

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