The Problem with HR Pitching Voluntary Benefits.....

Did you hear?  Critics are lashing out at the state of California and Arnold for aggressively pitching Long-Term Care to its residents.

It seems as if many expect state governments to avoid being a marketing channel, even if the product is in the state's own interest.

Some would say the same burden should apply to employers.

Warning - HR Capitalist opinion ahead which many HR professionals will not agree with....

Topic - "Voluntary Benefits", defined as benefits in which the employee pays all of the cost, provide employees with options for benefits and insurance coverage they might not otherwise be able to afford.  The affordability of such benefits is usually enhanced by the face that employees can often pay for voluntary benefits with pre-tax dollars.

Sounds noble, right?  Here's are a few problems that are often overlooked:

-Voluntary benefits usually include benefit classes like supplemental life insurance, long-term care and auto/property insurance that can have wildly variable cost structures based on the provider and the demographics that are insured.

-HR shops don't do RFPs that closely canvas each class of voluntary benefits.  They usually are hit by a comprehensive provider like an ADP, which provides a package of voluntary benefits with some high margin products built in.  If an HR shop doesn't do a comprehensive provider of the benefits, then they are usually assaulted by the bank, or insurance agent with the most aggressive marketing strategy.  In that scenario, HR people are often bad at saying no.

-Everyone, including the employee and the voluntary benefits provider, loves the concept of voluntary benefit costs being automatically deducted from their paycheck.   Employees love it for the convenience and the fact they don't have to track it.  The providers love it because they don't have to collect money.  Once the automatic deduction is in, it's hard to get out.

Put all that together, and it's complicated.  Here's the biggest issue I have, and one of the reasons I haven't opened my shop up to voluntary benefits since I arrived at my current company - I feel responsible for the solicitation.  If I'm going to open up our employee base to a voluntary benefit, for which the employee is going to pay 100% of the cost, I feel like I am VOUCHING for its quality and value across the marketplace.

And there's no doubt that employees expect you to be looking out for their best interests.  So, they take the voluntary coverage, if available, often without shopping. 

If I am going to allow an auto insurance product to be marketed to my employees through our normal channels, I feel like I need to say the quality/price combination is the best in the marketplace.   And that, my friends, is hard to do.

And that's why I traditionally have said no to the concept of voluntary benefits. 

Comments

[Donna Van Gundy]

I wholeheartedly agree with your comments- it is a disservice to promote "benefits" that aren't really benefits or that line someone else's pockets-- as HR professionals, we're committed to looking out for our employees' interests. There are some great voluntary benefits, but we should only offer those that we know are quality because we've done due dilligence.

[Frank Giancola]

KD,

I agree. If you can't do the due diligence to ensure a good offering, then I wouldn't offer a voluntary benefit. If you can, then you are offering employees a benefit that the company doesn't want to pay for, but is of value to employees. It can be an inexpensive way for the company to offer employees a low cost and high quality benefit that many will appreciate. It can improve the total rewards package and may be better than providing nothing at all.

I wouldn't get involved in heavily promoting one or sending employees communications at work. Let the vendor send them the detiails at their homes.

Frank Giancola

[Scott]

KD,

I feel that if it is presented correctly, it really doesn't reflect on HR the way you guys (HR Pro's) say it will. My last company offered several "voluntary and portable" benefits. Some were crap(pre-paid legal) and some weren't (supplemental life insurance).

The way it was presented was that the company was allowing these people to "preview" the products to you, but you are under no obligation to buy, sign up for, or participate unless you are interested.

We were told up front before the presentations began that we should shop the product and if we still felt like it was a good value, we could sign up and have it deducted through payroll.

I felt in no way that the benefits were "sactioned or endorsed" by my company.

I still have the supplemental life I signed up for and am very happy with it.

What burns me is how you sign up for an "endorsed" benefit and then a year later the company you were used to dealing with is changed. If you endorsed them last year, what happened? They were great last year but this year they are a bunch of over charging heathens. What gives?