What You Need to Know About Group Life Insurance

A study conducted by LIMRA and Life Happens found that 41 million Americans say they do not have life insurance coverage at all. When it comes to providing benefits for your employees, life insurance ensures they give their families much-needed financial security. All too often, however, life insurance is a misunderstood and confusing topic. We are here to help.

Here is what you need to know about group life insurance plans.

What is life insurance?

Life insurance is a contract between a person and an insurance company. A premium is paid, and after a person’s death, a lump sum, or death benefit, is paid to the beneficiaries the person designates. The beneficiaries can use the money for any purpose they like.

What is group life insurance?

Group life insurance is when an entire life insurance contract covers a whole group of people. The policy owner is the employer or organization, and the policy covers all the employees at the organization.

Are there different types of group life insurance?

Yes, there are two different types of group life insurance: employer-paid or voluntary. These are usually seen as term life insurance, which provides your employees coverage for the term of their employment.

Employer-paid life insurance

Employer-paid life insurance is when the policy is paid by the employer. This offers your employees a convenient way to receive life insurance coverage. This type of coverage, at times, offers them coverage portability or the ability for your employees to continue their life insurance policy when they no longer work for you.

Voluntary life insurance

Voluntary life insurance is an optional benefit offered to employees. This type of life insurance is paid for by the employee directly to the workplace’s insurance company via a monthly premium taken out of their paycheck. Like employer-paid life insurance, voluntary life insurance can also offer coverage portability.

Why is life insurance important?

As an employer, you may wonder why life insurance is important to provide to your employees, and there are several reasons:

  • It provides for lost income: Providing a group life insurance policy helps ensure that your employees’ loved ones will have some financial replacement for the lost paycheck in the case of their death. This allows the family time to get a footing in their new reality.
  • It reduces stress: Losing a loved one is already a difficult and emotional experience without the added financial burden of losing a partner or parent. Life insurance will help protect the family from the difficulty that awaits. For example, finding help for childcare after the loss of a parent is a huge stress for the surviving parent. Knowing they have financial support to afford it can ease the pressure.
  • It helps cover bills and debts: Life insurance will help cover bills or debts your employees leave behind, so they are not passed to your employees’ loved ones.

It doesn’t have to be confusing

Life insurance can be, admittedly, confusing. But it is a smart move for employers who want to add family-focused benefits into their employee benefits plan. Talk to a trusted advisor who will help you decide on the best group life insurance plan for your employees.

 

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3 Ways to Set Yourself Up For Open Enrollment Success

Regardless of when your benefits package renews, there’s a lot to be said for employers who plan ahead. Undoubtedly, many changes caused by the pandemic have shifted the needs of employees and altered the ‘normal’ approach to open enrollment. However, planning has always (and will always) be a good idea—especially when it comes to group health plans.

Giving your organization time to plan and prepare will help you improve the absolutely critical process of implementing your benefits package, which has *major* repercussions on your return on investment (ROI). Start by following these three steps.

1. Consider changes to your benefits offering

Pandemic or no, employee needs are constantly changing. They have changed significantly over the past year and will continue to change as our country adjusts how we approach work. Since employee benefits are such a significant investment for employers, it only makes sense to meticulously review what benefits are most popular and what benefits don’t hold as much value.

Survey your employees and do your research. Since the start of the pandemic, some benefits have risen in popularity as employee needs have changed.

These include:

  • Virtual healthcare
  • Flex work, childcare, and elderly care
  • Financial wellness
  • Mental healthcare

Talk to your broker about your options and create a strategy that fits the needs of your employee population, as needs and wants can vary broadly. One size does not fit all for an attractive benefits package.

2. Open enrollment planning

Depending on the shifts your organization made since the pandemic, it’s important to consider how you will proceed with open enrollment this fall. Organizing a supportive and education-based strategy to guide your employees through enrollment can make a real impact on the employee experience during the process and increase plan utilization by employees.

  • Consider how to create a system that works for your employees wherever they are (on-site or remote).
  • Provide resources and support to employees as they make their decisions. These can include educational resources (such as this glossary of standard benefit terms), in-person or virtual support, and clear communication around deadlines and qualifications.
  • Get feedback from your employees before open enrollment about their experience last year and their concerns and needs for the upcoming season. Find common trends to help you fill in gaps that you may have missed in years past.

3. Preparing for implementation

Spend time reviewing and improving your plan of execution. This plan should include a detailed communication strategy, employee education, and year-round support. If you want to see significant participation from your employees, you need to engage with consistent support and education strategies. Ask your employees if:

  • They understand the benefits available to them. Do you offer an HSA or self-insured plan? If so, make sure your employees have a proper understanding of how these different plans work and what to expect when they participate.
  • They know where to go to ask for help. Do they have access to a support line? Are there online resources you are providing them?

Consistent and clear communication is a critical part of ensuring your employees participate in and get the most out of the benefit plan you’re offering. Consider which channels you will be relying upon (email, meetings, one-on-one support, a web page, etc.) to get the word out and offer support. Get clear on how and when you’ll use these channels and stay consistent in using them.

Preparation = success

The more you plan, the better you can guide your employees and your organization through the process of open enrollment. This isn’t the sort of thing you want to put off until the last minute or until your broker comes to talk to you.

Employee benefits are a crucial part of your employee engagement, retention, attraction, and ultimately, the business’s success. And as such, they require and deserve careful planning. By starting with these three steps, you’ll set your organization, and your employees, up for success.

 

 

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A Crash Course in Group Health Insurance Plans

When it comes to health insurance, people want the right amount of coverage. They also want coverage for what they see as high value (doctor’s visits, medical procedures, etc.). There are many insurance plans out there—the traditional fully insured plan, the level-funded plan, the self-funded plan…and you may be wondering what the difference is between them, and where to even begin.

Welcome to our crash course in group health insurance plans.

Where it all began—fully insured plans

Fully insured plans are probably what come to mind when you think of group health insurance plans. Employers get the plan from an insurance company (carrier) and pay a premium to the insurance company. The yearly premium rates depend on how many employees are enrolled in the plan. When employees make a claim, the insurance company writes a check to the healthcare provider (hospital, doctor, etc.). Employees are responsible for paying the deductibles and co-pays defined in the plan.

A fully insured plan usually includes coverage for medical procedures, prescriptions, and doctor’s visits. Employers tend to go the route of fully insured for their business if they want to give their employees predictable benefits that remain consistent over time and provide the business with a regular monthly fee to manage cash flow.

New paths and steppingstones—level-funded plans

Level-funded plans are the go-betweens, the bridge between a fully insured plan and a self-funded plan (which we will discuss in a minute).

With level-funded plans, employers pay a set amount of money each month to the insurance company that funds a reserve account for claims and manages administrative costs and fees. Rates for a level-funded plan is defined by the number of employees and the estimated cost of anticipated claims. If the employer has a surplus of claims funds at the end of the year, they will receive a refund. If the claims are higher than estimated, they will receive a premium increase for any stop-loss coverage an employer has.

Employers usually choose level-funded plans if they anticipate employees not making many insurance claims and want to offer their employees insurance at an affordable cost. It also allows ease of access to utilization trends that show where employees might be overspending and allows employers to use education and wellness programs to improve claims costs.

Rise in popularity—self-funded plans

The popularity of self-funded plans is on the rise. A report published in 2020 found that 60% of workers in companies with three or more employees were on some kind of self-funded plan. But how does it work, exactly?

With self-funded plans, or self-insured plans, an insurance company provides administrative services. Like with level-funded plans, there is a fixed cost for administrative fees. But unlike level-funded plans, employers assume all the costs and financial risks in a self-funded plan. They pay for employee health claims from a bank account or trust fund set up for that purpose.

These plans have the highest amount of risk; however, employers can have stop-loss insurance that reimburses them for claims that exceed a predetermined level. There are two types of stop-loss insurance:

  • Specific stop-loss coverage, or individual stop-loss coverage, provides protection for employers against a high claim for any one employee. For example, if employers want a maximum liability of $150,000 per person, and an employee makes $200,000 in medical claims, specific stop-loss reimburses the employer for the $50,000 in excess claims.
  • Aggregate stop-loss coverage provides a set coverage ceiling on the amount of eligible expenses employers pay during that contract period. In other words, this is the coverage for all the employees total, not just for any one specific employee.

While self-funded plans can be expensive without stop-loss coverage, many employers find self-funded plans attractive. If they don’t need to pay fixed monthly premiums and they want to proactively manage claims costs with a hands-on approach, such as steering employees to high-value, low-cost providers and taking advantage of clinical wellness programs, self-funding may be a good fit.

One size doesn’t fit all

What’s right for one company may not be right for you. There are many different health insurance plans and different plan options, and taking a route doesn’t mean you take the route alone. Many advisors are well-educated in level-funding and self-funding.

Start a conversation with your broker to find out if this is in their area of specialty. Whether it is or not, do your research so you can fully participate in the conversations to determine what is the best for you and your employees.

 

 

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Non-Insurance Solutions That Make a Real Impact

The world of employee benefits experienced significant growing pains since the pandemic hit a little over a year ago. With all the new challenges employees began experiencing (job loss, loss of childcare, financial instability, mental health, and so much more), employers learned, fast, that ensuring the wellbeing of their employees is essential.

Let’s break down some of the factors contributing to employee resilience and wellbeing that employers can effectively take action on.

Employee Wellness

It’s important to understand that while the term ‘wellness’ is singular, it encompasses a variety of factors that contribute to it. While someone may have good physical wellness, if they are experiencing hardship in other areas of their lives, their overall wellness will be affected. In this way, employers need to approach wellness holistically, focusing on more than one contributing factor in an employee’s overall wellbeing.

Financial stability

A 2018 report by the Federal Reserve found 40% of adults would struggle to pay off a $400 unexpected expense. According to the MetLife Employee Benefit Trends Study 2021, financial stress is both the top concern and the leading factor contributing to poor mental health among employees. A staggering 86% of employees reported financial stress was a leading source of anxiety now and going forward.

These numbers vastly differ between demographics, showing a disparity in the experience of white/Caucasian and Black and Latinx respondents. When asked if they had been worried about their financial health, 53% of white respondents and 70% of both Black and Latinx respondents said yes. These numbers are concerning not only because of the disparity they represent but also because they demonstrate the vast number of people suffering from financial stress.

Many employers function under the misconception that their employees are financially stable, but there is no way of knowing what kind of financial burdens employees may carry. They may be a single parent, a caregiver of a family member with medical needs, or struggling to pay off staggering student loan debts. Whatever the case, employers that offer financially focused benefits can help make a significant difference in their employees’ lives.

Consider offering financially focused benefits aimed at developing financial stability for your employees now and into their future:

  • Student loan support
  • 401(k) and other retirement savings
  • Monthly wellness stipends
  • Financial coaching and education
  • Childcare support

Mental health

One of the positive side effects created by the pandemic has been the increased availability of accessible mental health support. Organizations like BetterHelp and Talkspace provide access to qualified therapists that provide therapy services online or over the phone, and these services have taken off over the past year as more Americans have reached out for mental health help. Offering programs designed to overcome cost barriers that may deter employees from accessing mental health services is a great way to help support your employees’ wellbeing.

Flex time

Another way to provide support to employees is to offer flex time. Many organizations have started to use flex time since the pandemic began, along with remote work. According to the same MetLife study, 76% of workers are interested in continuing alternative working arrangements developed during the pandemic such as remote work and flexible schedules, but 90% of employers who said they implemented these alternative solutions are planning to go back to pre-pandemic working arrangements when possible. That is a concerning disparity that may result in employee frustration when they are forced back into the office, expensive commutes, and less flexibility to manage their personal lives.

68% of employees working remotely want their employers to allow them to make the decision for themselves. Over half of workers in their 20s, including Gen Zs and young Millennials, are happier with their working arrangements now than before the pandemic.

Flexible scheduling, remote options, and unlimited PTO programs allow employees to better manage their personal commitments with less stress, enabling them to maintain their overall wellness with greater ease.

Social justice

2020 wasn’t just the Year of the Pandemic, but a year of great social unrest and change. 42% of all employees say that social justice issues are a source of anxiety for them. These issues reach across demographics, location, age, and economic status. All employers must do what they can to provide support in this area.

Consider offering:

  • Paid volunteer hours
  • Paid holidays or time off during election days
  • Inclusivity training for managers and employees

In it for the long haul

Employee wellness was a critical issue long before the pandemic and will continue to be one well into the future. Employers who are serious about developing a company that can drive growth, attract, retain, and engage employees, and leave a positive legacy behind them need to be considering these issues consistently throughout the years.

What’s good for your employees is good for you: employees who identify as mentally and physically healthy are 37% more productive than those that aren’t. And that’s just one statistic that shows how caring for your employees creates a positive ripple effect within your organization, their community, and the world.

It’s a win-win for everyone.

 

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It’s Time to Expect More from Your Broker

For most employers, the story is the same every year. They don’t hear from their benefits broker until renewal starts to appear around the corner, and then it’s spreadsheets, rising premiums, and more spreadsheets. The world of insurance is confusing and frustrating, and for many employers, this leads them to seek out second opinions from multiple brokers. Why wouldn’t you? Even if your goal is just to keep your current broker honest, it’s only common sense to get second opinions on a purchase that large.

But here’s the problem. Almost without fail, the brokers you talk to will get the same numbers from the carriers, bring in the same spreadsheets, and will likely tell you about their services, which are the same as every other broker. Benefits admin support, compliance support, HR services—the list goes on, and it’s almost always the same.

You still have to make that gut-wrenching purchase come renewal time, and you still feel in the dark about your options.

So how do you decide which broker to go with if everything they’re offering is the same? That’s where many brokers and employers alike would point to the “relationship” part of the business. They would say it all comes down to who you like the best.

But we disagree. There is a different kind of broker out there—one that doesn’t look the same as the rest and can offer you something different—something better.

What you really need

While every year you feel the same frustration and anxiety around having to make an extremely (and increasingly) expensive investment in your employees, how much do you really understand about why you’re making that particular purchase?

The reality is most employers simply don’t have enough real experience with the world of insurance other than that dreaded yearly renewal process. This leaves them at the mercy of their broker and relying on others to tell them what’s best for their business.

While this makes sense—the world of insurance is increasingly confusing and constantly changing—it’s simply not sustainable. What employers need is to have the power to make an informed and educated decision when it comes to their benefits plan. They need to have the kind of power only true understanding can bring.

How to differentiate

So it’s time to start looking for something different in your broker. Here’s how to spot it. While the benefits broker you’re used to will:

  • Only get in touch with you when it comes time to renew
  • Offer you the same spreadsheet and the same services every year
  • Assure you their service is the best and that’s what sets them apart
  • Hand you their non-insurance solutions and call it good
  • Completely fall off your radar once you’ve renewed

The benefits broker you want:

  • Shows up well before you have to start thinking about renewals
  • Starts off the conversation by uncovering your goals and challenges
  • Focuses on educating you about your options
  • Isn’t interested in forcing you to buy unless their solution improves your business
  • Continues to provide you with advice and education throughout the year
  • Supports the use of non-insurance solutions via training, communication, and education

The first type of broker wants you to buy from them and pick them out among the rest. While the second type also wants that, their first priority is to help you improve your business and make an impact in the lives of your employees. What you need isn’t a benefits broker—what you need is a benefits advisor.

Why?

So you can make the most informed decision for your business without blindly relying on a handful of brokers at renewal telling you the same thing over and over. So you won’t make the mistake of simply sticking to what you know just because you know it, passing over opportunities to make massive savings because you don’t understand them, and thus don’t trust them (yes, this really happens).

The world of insurance is growing and changing, and employers need to be able to grow and change along with it—and that requires employers to become educated about their situation and their options.

Expect more

The bottom line is you don’t have to settle for the same type of broker. In fact, you shouldn’t. You and the people your business supports deserve the best service and the best benefits available—and you can only get that by having the power to make informed decisions yourself.

Start expecting your broker to teach you. Start asking questions and expecting answers. Look for a broker who focuses on education, year-round communication, and who takes the time to help you fully understand all your options. You deserve more than the same old story. It’s time to expect a new one.

 

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Photo by Volodymyr Melnyk