October 2010 issue of HR News magazine - IPMA

ecoNomic outlook
CONTINUED FROM PAGE 17
The most efficient way to offer voluntary
benefits is through a cafeteria-style
program that includes both employerprovided
and voluntary benefits. A coordinated
menu of options will encourage
employees to think about their needs and
make optimal selections.
Work with Vendors
One of the challenges of integrating traditional
and voluntary benefits is getting
voluntary benefit vendors on board. As
benefit offerings have become more
complex, insurance companies have
narrowed their portfolio of services,
offering fewer voluntary benefit options.
Similarly, broker-administrators have
developed specialized expertise in education,
enrollment and administration to
support those limited platforms. This has
made it more difficult to design and coordinate
voluntary and employer-funded
benefits. Also, the best way to manage
education, enrollment and premium
collection differs by offering. Certain
voluntary benefits are most effectively
funded through payroll deduction and
others through an annual fee. Some, but
not all, vendors offer help with employee
communications.
Employers should evaluate vendors’ offerings
and develop strategies to educate
and enroll employees. They also should
ensure offerings are properly priced and
underwritten, including having a renewal
formula and procedures (covering such
things as expenses, trend, credibility and
participation) consistent with objectives.
When selecting vendors for new
employee-paid voluntary benefits through
competitive bidding, employers need to
make sure coverage is efficient, costeffective
and sustainable. The process is
as important for voluntary benefits as it is
for employer-paid benefits.
Public sector plan sponsors should keep
in mind that their size, compared to most
private-sector employers, usually gives
them an advantage in negotiating with
new vendors. Vendor selection should
cover financial terms, payment methodology,
administration and performance
standards and renewal terms.
Public sector employers should monitor
the performance of existing and new
vendors periodically. Among the factors to
| 20 | OCTOBER 2010
Newer Voluntary Benefits,* Employee Needs Met and
Employee Benefits Complemented
Newer Voluntary Benefits Employee Needs Met Employee Benefits
Complemented
Fitness Center General Anxiety/Stress Basic Health Care Plans &
Wellness Programs
Financial Planning Investment Losses in Savings &
Defined Contribution (DC) Plan
Accounts & Inflation
Education/Training/
Retraining
consider are utilization, employee satisfaction
with customer service, technology,
administration and claims paying ratings.
Conclusion
Public sector employers that devote
resources to the design, underwriting,
administration and pricing of voluntary
benefits will benefit by offering a valuable
service that will encourage employee
engagement during difficult times.
Voluntary benefits can also help soften
the impact of any benefit reductions that
the employer has had to make.
Appropriately packaged and delivered,
voluntary benefits can significantly
Defined Benefit Retirement
Plans & DC Plans, including
§403(b) & §457 Programs
Unemployment Supplemental Unemployment
Benefits, Severance Plans &
Tuition Reimbursement
Mini-Med** Illness FMLA & DC Savings Plans
Excess Major Medical*** Extended Serious Illness Health Care Plans, FMLA, DC
Savings Plans & Short-Term
Disability
Dread Disease Rider to Life
Insurance
Specific Health Illness Health Care Plans, FMLA, DC
Savings Plans & Short-Term
Disability
Hospital Supplement Extended Hospital Stay Health Care Plans, FMLA, DC
Savings Plans & Short-Term
Disability
Automobile & Homeowners’
Insurance
Legal Risks & Natural Disasters Group Legal & DC Savings
Plans
Legal Insurance Legal Risks DC Savings Plans
Identity Theft Protection Unauthorized Use of Identity
and Credit
Discount Shopping Programs Paying for Household
Purchases
Group Legal & DC Savings
Plans
DC Savings Plans
Information about §529 Plans Paying for College Financial Counseling
* National information about the percentage of public sector employers offering these voluntary benefits or
the percentage of employees who opt to participate is not available.
** Mini-Med is limited coverage typically available to select employee groups, such as part-time employees.
*** Excess major medical is catastrophic coverage for out-of-pocket costs.
Source: The Segal Company
enhance the actual and perceived value
of employer-provided benefit programs.
Howard Goldsmith is a senior vice president
in the New York office of The Segal Company.
He has more than 20 years of experience in
benefits consulting. He can be reached
either by phone at (212) 251-5258 or by email
at hgoldsmith@segalco.com. Lawrence
Singer is a senior vice president in the New
York office of The Segal Company. He works
with large public sector health plans and is
an expert on health, life and supplemental
benefit plans. He can be reached either by
phone at (212) 251-5095, or by e-mail at
lsinger@segalco.com. —N
HR NEWS MAGAZINE