Voluntary Benefits Grow as an Employer Solution to Legislation

It remains to be seen what effect legislation will have upon employer groups, and just how much costs will be driven up. To make up for the costs, some employers are now looking at voluntary benefits as a way to offer an employee benefit at no cost to the employer.

Several studies have come out backing this notion up. A Mercer study showed that a quarter of employers responding feel that complying with the Patient Protection and Affordable Care Act will add at least 3% to next year’s costs. Employers are now looking at voluntary benefits as an option.

New regulations like expanding coverage for dependents up to age 26, elimination of annual and lifetime maximums and prohibiting pre-existing condition clauses for children will have health care costs soaring for employees. According to the Milliman Medical Index (MMI), an 8% increase in employer health care spending will increase annual costs for a typical family of four to slightly beyond $10,000 for the first time.

Between out-of-pocket expenses and payroll contributions, employee costs rose 7.4%, MMI finds. To fulfill employee needs, more employers are looking at voluntary benefits as a way of filling the gap. The competitiveness of premium rates and benefits of the exchange plans, the evolution of existing insurance plans, the effect of Cadillac-style plan taxes and federal fines, along with employee age and health status will affect whether employers seek out voluntary benefits more.

According to UNUM Group, voluntary benefits will become more of an option with rising health care costs and the bad economy. When mixed with traditional benefits like health care coverage and dental coverage, employers can offer a complete set of benefits with the financial protection that is right for them. They may help pay for expenses not covered by traditional benefits such as medical insurance.