Lingering Personal Burdens Prompt Employers to Add Alternative Benefits

Despite the nation’s economy slowly easing out of the Great Recession, many workers are still struggling to cope with financial burdens, underwater home values and worries about job security. Understandably, such emotional turmoil has taken its toll in the workplace.

A 2011 study by Hyatt Legal Plans, which is a MetLife company, found that 37 percent of men and 47 percent of women said that dealing with their legal issues negatively affected their physical or emotional health.

The study, The Impact of Legal Matters on Today’s Work Force, also indicated that workers who do not hire an attorney to help with legal issues are nearly three times as likely to spend five to 10 hours at work dealing with those problems than people who hire a lawyer, the study showed. And 50 percent of employees without legal-plan assistance took time off from work to deal with their issue compared with 30 percent who took advantage of an employer-provided group legal plan.

Such widespread personal issues among the workforce—including financial worries, legal matters and health concerns—offer employers an opportunity to ease workers’ personal burdens while simultaneously helping increase employees’ focus on their duties. Employers are increasingly turning to alternative benefits, most of which come at a relatively low cost, to reduce employees’ distractions.

“We have seen an increased interest from middle and large employers in using elective benefits as part of their overall strategy,” says Bruce Sletten, vice president of elective benefits for consulting firm Aon Hewitt in Fort Worth, Texas. “For employers who are maintaining a traditional PPO plan, the majority of discussions focus on elective benefits that complement the plan, such as critical illness, hospital indemnity and accident benefits.”

Sletten explains that elective benefits such as critical illness and hospital indemnity help shield employees from high out-of-pocket costs associated with increased deductibles and decreased coinsurance. Benefits that help protect income, such as legal plans, group long-term care, life insurance and group auto are being used by employers to ease financial burdens on their employees.

“HR folks know that medical costs could increase by 60 percent over the next five years and are looking for meaningful strategies to maintain the integrity of their core medical plan while helping employees feel comfortable with increased costs and new financial risks associated with health care,” he says.

However, large employers are just starting to notice critical-illness insurance, says Paul Rogers, president and chief operating officer of Chicago-based Pacific Resources, an employee benefits advisory firm. The 2010 MetLife Critical Illness Insurance Awareness study indicates that only 28 percent of full-time employees say they have heard of critical-illness insurance, and many confuse it with health care or disability insurance.

Rogers believes health care reform is the major driver of the current interest in voluntary benefits, because health care has typically been the driver for employee benefits. Employers “have turned off the spigot” and are not looking to pay for additional benefits for employees, but rather to offer group plans they can purchase at reduced rates, he says.

“As health care reform begins to gain traction, we may start seeing more supplemental medical benefits like critical illness or accident insurance that will be reshaped based on how reform settles in,” he says. “No one knows how things will work out, but we expect that employers will no longer rely solely on health care benefits to attract and retain employees.”

San Francisco-based Trustnode, a provider of interactive education and advice platforms, attributes its recent rapid growth to an increased emphasis on voluntary benefits among its midmarket clients.

“There’s an expansion of voluntary benefits being offered, from those related to medical plans to pet insurance and group legal plans,” says CEO Kevin Dunn. “New distribution methods that take the administrative burden off of the employer will continue to make these benefits more enticing to the HR professional.”

Indeed, according to MetLife’s ninth annual Employee Benefits Trends study, released in late 2010, 61 percent of employees value voluntary benefits as a way to meet their personal needs, saying they save time and money when accessing such products through their employer.

One company, CCC Information Services, Inc., a provider of information technology solutions for the insurance and auto-body collision repair industries based in Chicago, introduced critical-illness and accident insurance to its 1,000 employees last fall. More than 30 percent took advantage. The company offers four medical plans, two of which are consumer-driven options with high deductibles.

“We are easing into the voluntary benefits arena and wanted to offer choices that aligned with our medical plans and would provide an additional cash source in the event of a serious accident or illness,” says Julie Hoffman, CCC’s director of total rewards.

Eighteen percent of the company’s employees enrolled in accident insurance, and 15 percent of employees and their spouses took advantage of the critical-illness option, Hoffman says. She says CCC plans to include more voluntary benefits to differentiate itself from the competition and enhance recruitment and engagement tactics.

Lisa Beyer is a writer based in Florida. Comment below or email editors@workforce.com.