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The Definition of Employee Benefits Is NOT Medical Coverage
With the rising cost of medical care, employers and their human resource staff, walk a fine line between the perceived value of the medical benefits and the employee contributions or cost for those same benefits. In their efforts to come up with the best offering, the rest of the ancillary benefit coverage options (such as life insurance, short and long-term disability and long term care) are given little thought. This is not only true for plan design, but also employee education. The end result of this focus and effort is a company ends up with a very lop-sided program that concentrates on their sick population and gives little thought to those who are lucky enough not to need medical care.

Ancillary benefit programs should be reviewed and analyzed each year for plan design and cost. If you feel you can’t do an adequate job while also trying to review and/or change medical costs and offerings, then set the ancillary offerings for an off-anniversary review. Ancillary benefit carriers will still let you keep the same policy anniversaries.

From personal experience I can tell you that the majority of employees are more apt to spend their hard earned dollars on dental and vision coverage than life or disability insurance. In my 29 years of experience, it never ceases to amaze me that employees are willing to purchase the coverage to assure doctors, hospitals, surgery centers, dentists and optometrists get paid, but do nothing to make sure they have the money to buy food or make the house payment in the event they can’t work.

I believe the majority of employees operate on the premise of “that could never happen to me”. They believe they might need a root canal or bifocals, but premature death or an accident that would take away their ability to work – that only happens to “the other guy”.

A few things to consider:
  • At any given age, the odds of becoming disabled are much higher than the odds of dying.
  • Every year, 12% of the adult U.S. population suffers a long-term disability.
  • Cancer continues to be the No. 1 cause of long term disability, according to LTD carriers in the nation. In 2007, cancer led to more than 12 percent of LTD claims, followed closely by pregnancy complications and back injuries.
  • According to the Council for Disability Awareness, 3 in 10 people entering the work force today will become disabled before retiring. One out of seven workers will suffer a five-year or longer period of disability before the age of 65.
  • If you are 35 now, your chances of experiencing a three-month or longer disability before you reach age 65 are 50%, according to the National Association of Insurance Commissioners.
  • Statistics like that make should make these ancillary benefits a vital piece of your overall benefit package.
A final thought…If you are satisfied each year to get a letter from your ancillary carriers with no rate increase, that means there is an opportunity for the cost to go down or benefits to increase… Don’t be complacent!