The Continued Rise of Voluntary Benefits

Voluntary Benefits are having more than a moment – they’re on pace to have a decade! Interest in Voluntary Benefits boomed during the COVID-19 pandemic and the enrollment numbers followed, we are expecting the trend to continue for at least the next five years. In a recent McKinsey study, we find that the compound annual growth rate (CAGR) for Supplemental Health premium is expected to exceed 10% through 2030 – a stark contrast to the CAGR anticipated for life and disability products. If these forecasts are correct, it will make Supplemental Accident and Health products the fastest growing non-medical premium volume in the Health and Welfare space.

Product Line	2022-2030 CAGR
Life	2.4%
Short Term Disability	2.1%
Long Term Disability	1.3%
Supplemental Accident & Health	10.6%

 

How did we get here?

First, as supply chain issues and inflation drove the cost up for most goods during the COVID-19 pandemic, employees felt pressure to expand their buying power. One of the ways they solved for that was to elect health plans with lower premium, typically resulting in both higher deductibles and out-of-pocket maximums. Having taken on more risk by opting for more economical health plans, many employees elected Accident, Critical Illness and Hospital Indemnity policies to offset potential expenses they may incur as a result of their health plan election, such as large hospital bills and/or loss of income due to illness or injury, with the added benefit of providing employees with additional financial security.

Second, Employers have been paying more attention to the benefit choices they offer, the diverse needs of their multi-generational workforces, and creating more opportunities for employees to select benefit offerings that solve for their individual concerns. According to a recent article from Voya, 56% of employed Americans are more likely to stay with their current employer if offered access to voluntary benefit offerings. Further, McKinsey’s report, The State of Organizations 2023, finds that employee benefits are the among the top drivers for employee turnover, second only to higher compensation. Employers that saw the intersection of interest and need met employees right where they were at by providing access to voluntary benefits.

Are the majority of employers offering Supplemental Health Plans?

According to the International Foundation of Employee Benefit Plans’ 2022 Employee Benefits Survey Report, yes! In fact, nine out of every ten employers offer at least one voluntary benefit. This survey report also emphasizes that larger organizations (those with 500 or more employees) are more likely to offer voluntary benefits than smaller organizations.

Employer Voluntary Benefit Offering Prevalence
Supplemental Health Product	% of Employers Offering Benefit
Accident	54%
Critical Illness	52%
Hospital Indemnity	29%

 

Many employers use off-cycle enrollments for these new additions, providing a less frantic experience for both employees and HR teams. Off-cycle enrollments also ensure the proper employee engagement, education, and communication around these Supplemental Health Plans, often yielding better enrollment results. Reach out to your AssuredPartners team for additional support and guidance.