Time & Attendance
By Megan Frey
Mar. 13, 2018
For millennial workers these days, there’s another important milestone between turning a quarter-century old and hitting the big 3-0.
For many, 26 marks the age they must move off their parents’ health insurance plan and start building their own financial future. Many will turn to their employer-sponsored health plans, but this is just the start of providing millennials with the financial security they seek.
Once the medical plan is in place, it’s time to help 20-somethings understand how voluntary or supplemental benefits that are also often part of their employers’ benefits programs can help fill “gaps” their health insurance may not cover. Those gaps can create immediate financial hardship, as well as endanger retirement savings — savings that will be needed as these millennials eventually approach retirement age. In 2052, today’s 26-year-olds will be 60; in 2070, they’ll be 78. The question becomes, how do employers help them prepare for this important milestone?
This is a great opportunity to show how supplemental, or voluntary insurance — like accident insurance, which pays benefits for an injury or event that results from an accident (think broken arm from falling off a bike, or torn ACL from a ski accident) — can be part of a comprehensive, long-term plan, and help employers keep their employees engaged if an unexpected covered event occurs by making the most of their benefits programs. Since these products are designed to complement certain medical plan choices, it makes sense to offer them at the same time an employee elects medical coverage.
Connecting With 20-something Employees
Before talking about the what, we need to address the how. Contrary to popular belief, millennials do seek guidance when it comes to important financial decisions. Also, don’t be afraid to reach these employees through social media. Try to provide videos, infographics or interactive features. Always keep the big picture in the forefront, but provide relatable content that will go a long way with this audience.
Expect two common hurdles. First, most people (of any age) don’t like to think about serious illness, injury or other crises. But the reality is that unexpected things happen to everyone and voluntary benefits can be part of a strategy to help protect financial wellness.
Cost is also a common concern. A younger audience is likely still paying off student loan debts. They may also have high lifestyle expenses, particularly if they’re living in a millennial-friendly city with high rent, transportation costs and plenty of social outings at their disposal. If they love their independence, then use voluntary benefits as a point of emphasis for their financial security.
To help get millennials excited about the advantages of voluntary benefits, consider these scenarios:
“Wait, my health insurance doesn’t cover that?” Many millennials, particularly if they’ve been mostly healthy and injury-free, won’t know that their health insurance has limitations. They also may not know what having a high-deductible health plan truly means to them financially.
Many are attracted to these HDHPs because they come with lower premiums. If an insured worker gets seriously sick or injured, however, out-of-pocket expenses with an HDHP could total thousands of dollars. If they are contributing to a health savings account, the money they need to reach their deductible could go beyond their HSA balance.
The good news is, these gaps can sometimes be addressed by other voluntary insurance products. These products often include accident, critical illness, specified disease and hospital confinement indemnity insurance and are an important part of an employer’s benefits program.1
It’s important to note that these are limited benefits and do not satisfy the requirement of minimum essential coverage under the Affordable Care Act. Stress that they can be beneficial in an overall strategy and can be used however the insured chooses. For example, if an employee were to be hospitalized for a short time, hospital confinement indemnity insurance could help cover a portion of medical deductibles or be used for personal expenses such as utilities or grocery bills.
“But retirement is so far away.” Pairing voluntary benefits with a health care plan and retirement savings helps solve two related problems. It makes it easier to save consistently, and if an unexpected injury or illness occurs, it helps keep savings and the growth of that savings (since it compounds over time) in place.
It can be a challenge to help millennials see the importance of saving now for their retirement years and protecting their savings. In a recent experiment, scientists figured out one way to do that. They recruited college-age men and women, outfitted them with goggles and sent them into a virtual reality laboratory. There, they encountered a kind of mirror that was digitally altered to make them look 68 or 70 years old.
Researchers then asked the participants a series of questions about finances and retirement. Those who had seen their older selves said they were willing to put twice as much money into long-term savings accounts than those who hadn’t seen their retirement-aged selves.
My guess is most benefits and HR managers don’t have a pair of virtual reality goggles lying around, so it’s up to employers to provide the tools necessary for millennials to take hold of their financial future.
Let 26 be the year they get smart about protecting and growing their savings. A combination of supplemental voluntary insurance benefits and a structured savings plan is a simple way to work toward a stable financial future. And this is something all of their future selves will thank them for.
Megan Frey is the executive regional manager for Voya Employee Benefits’ Mountain & Pacific Northwest sales team. A millennial, she started her career with Voya Financial in 2009 as part of the Atlanta-based employee benefits sales team and worked her way up to senior sales representative before moving to the West Coast. Comment below or email firstname.lastname@example.org.
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