HOW VOLUNTARY BENEFITS HELP EMPLOYERS MANAGE WORKERS’ COMPENSATION RISK

Imagine a world where voluntary benefits act as risk management tools to help reduce risk and exposure for your clients. In an ever-changing environment, these are the concepts that top tier brokers are deploying to stand out and create a unique vantage point in the marketplace. 

What’s the correlation between workers’ compensation and voluntary benefits for employers? 

Workers’ compensation provides legal entitlement to workers who are injured on the job. It’s designed to help people pay for expenses incurred due to an injury that occurred while working. 

For employers, the financial and administrative obligation is a hefty one. On top of having to shoulder 100% of the cost, improper management of risk can lead to excessive claims, and/or bad behaviors; all of which drive up cost to the employer. Workers’ comp can also leave injured employees without financial protection as they recover if they still have needs that expand beyond what workers’ comp is designed to cover (i.e., pay bills and other expenses while out of work). 

Recent trends in the market have employers looking to shift the cost of health insurance, at least more heavily, to their employees with high deductible health plans. By shifting more of the risk on out-of-pocket expenses to the employees, they can drive the price of their medical plans down, making it more affordable. 

The true risk lies in the behavior this might drive in the workers’ comp space. Most employee benefit brokers tend to take a unilateral approach when considering plan changes to their core medical plan.

Making a plan more affordable, by proxy, usually means you also make it harder to use. Herein lies the problem – when plans become more difficult to use, individuals will often default to the path of least resistance.

Companies can add voluntary or supplemental benefits to help manage these and other risks. For example, accident coverage gives employees the much-needed financial assistance to seek care, as reimbursement is received quickly. It also goes a long way in encouraging employees to use workers’ comp properly. While this strategy might not be a great fit for the white collar market, it plays very well in the blue and gray skilled labor markets. 

Statistics show that 64% of employers plan to add voluntary and supplement products into their plans. Employees are looking for these benefits, too, with interest in disability almost doubling (from 18% to 34%) compared to 2022. Additionally, life insurance interest tripled (30% combined for group and whole life, up from 10%) compared to 2022. 

Voluntary benefits can be partially or fully funded by the employer or completely by the employee, and paid directly from the carrier to the employee in the event of illness or injury. You’ll manage risk more effectively if everyone is included in the program (fully funded) vs. making it voluntary and only capturing 30-40% of the employee population. 

Where to get started 

We are a trusted partner, guiding employers and their employees through healthcare choices including voluntary benefits, benefits administration, and year-round advocacy services to reduce costs and increase benefits engagement.