Prior to healthcare reform, supplemental insurance solutions, also referred to as gap solutions, were often an afterthought because there were more primary plan options that could offer different levels of coverage, and there was more flexibility in who you could offer them to.
But in today’s landscape, supplemental health insurance plans have become more necessary than before. In fact, benefit savvy companies are making them part of their upfront benefit strategy for two main reasons:
Health insurance remains the #1 benefit that employees value. ¹ Plus, benefit satisfaction leads to a 30% higher retention rate, important in today’s continued tight talent market.²
Supplemental health insurance solutions have the flexibility to be layered on top of primary plans to increase coverage and customize benefits for specific employee populations in a more cost-efficient way.
The goal, of course, is finding the right supplemental health insurance solutions that will effectively enhance a company’s strategy and goals.
The Employee Benefits Landscape
Growing Out-of-Pocket Costs
Group health plan costs continue to increase year over year, impacting the coverage picture and cost-burden for employees. To control expenses, companies are forced to put high deductible primary health plans in place or find other ways to transfer more costs to employees.
To demonstrate the extent of this cost-shifting trend, in 2013, the average single deductible was $1,135. Today, that number is $1,763, a 55% increase.³
But it doesn’t stop there. There are also more hidden changes in coverage, such as:
Lowered out-of-network reimbursement levels
Changes to the
Rx formularies
Limited or no dental
and vision coverage
The Result
Worker’s share of OOP and premium costs have risen from 42% in 2013 to 67% in 2018.⁴ Today, what was $2400 in personal healthcare expenses is $3,550, a 48% increase in 10 years.⁵
The Employee Benefits Landscape
The Retention-Benefits Tug-of-War
With limited ways to offset rising premium costs other than continued cost-shifting, employers are caught in a problematic tug-of-war between offering attractive healthcare benefits to aid in recruitment and retention and the costs of those benefits.
While employers can save on benefit costs through cost-shifting strategies and plan design changes, this approach raises the risk of benefit dissatisfaction, in turn impacting the ability to keep key talent on board. And when you factor in both the direct and indirect costs of talent loss, this impact on the bottom line can be substantial.
What can you do to solve this strategic HR issue?
The Employee Benefits Landscape
RECRUIT & RETAIN HIDDEN COSTS
3 out of 4 employers have trouble keeping talent⁶
Healthcare is the #1 benefit employees consider before accepting a job⁷
Health Benefits visible Costs
There has been a 52% compounded increase in premium cost since 2013⁴
There was a 6% increase in premium cost in 2021 alone⁴
The average deductible has risen 55% since 2013³
Recruitment Issues:
A Closer Look
While not every company has broad-based recruiting needs, most have pockets of recruiting and retaining issues for certain critical positions, whether it’s because the position requires a specialized skill or because the demand for the position is higher than the number of people trained and qualified for them.
While it can be different for various industries, here are some examples:
» Key leadership positions
» Top performing sales executives
» Retail regional managers
» Information security analysts
» Registered nurses
DID YOU KNOW?
2 out of 3 of your executives may be thinking of leaving, or are already preparing to depart.⁸Supplemental Health Benefits
Supplemental health insurance benefits used to remain back-of-mind because of the various primary plan options that could offer different levels of coverage. But that’s no longer the case. Supplemental health insurance benefits are now the main way to offer benefit differentiation and necessary additional coverage. Plus, because benefits are critical to retention and recruiting strategies, employers are looking to offset some of the growing coverage gaps using various supplemental benefits.
The need for supplemental health insurance solutions is clear and has been identified and acknowledged by employers. However, finding the correct type of supplemental health insurance solution to fit an employer’s specific needs has proven to be a challenge.
The most well-known type of supplemental health insurance solutions fall into the category of voluntary insurance, also known as worksite voluntary. In fact, some benefit consultants and even industry publications erroneously interchange the words “voluntary” and “supplemental.” While voluntary is a type of supplemental benefit, not all supplemental options fall into the category of voluntary. Their application also tends to be vastly different than other types of more comprehensive supplemental plans. It’s important to weigh all types of supplemental solutions when considering how to design a supplemental benefit strategy that will support recruitment and retention.
0
%
of employers recognize how important supplemental health insurance benefits are to their rewards strategy⁹
MORE THAN 80%
of employers choose supplemental tools to enrich their already existing core benefits strategy.⁹
Almost 90%
of employees rank health-related benefits as very or extremely important.¹⁰
Learn more and get the details in our latest eBook. Discover how to offer talent-magnet benefits while keeping your budget in check.