Changing Workforce Demographic Reflected in Employer Benefit Choices

July 2, 2008 (PLANSPONSOR.com) - A new report from Unum lays out changing trends in voluntary benefits purchases by employers driven by a changing workforce demographic and rising health care costs, and provides employers with suggestions on how to deal with these factors.

The report shows that nearly half (44%) of sales of voluntary benefits in 2006 were for life or disability insurance, according to data from LIMRA and Eastbridge Consulting Group. In addition, 26% of employers in a 2007 Eastbridge Consulting study offered critical illness benefits and 19% offered long-term care insurance.

According to the UNUM report, the trend of offering a group benefit foundation and layering on voluntary products to meet workers' needs is catching on. Unum sales data shows voluntary benefits are most often purchased by females and by workers in the 30-49 age group.

In 2007, UNUM data shows, nearly 10,000 employers offered a form of employer-sponsored long-term care insurance. Over 90% of employers now fund some part of their LTC coverage, compared to 100% employee funding in past years.

Group long-term disability and short-term disability insurance plans are offered by companies of all sizes across all industries, but the UNUM data shows a shift toward 100% employee-funded plans. While life insurance is the most common group benefit offered by employers, the report said the number of companies offering this benefit has decreased slightly.

A market analysis of supplemental health benefits, according to the report, shows:

• 292,000 employers offer accident insurance,
• 246,000 employers offer supplemental medical indemnity-type plans, and
• 207,000 employers offer critical illness coverage.

UNUM suggests that it is best for employers to present an integrated offering of benefits. Sixty-eight percent of voluntary insurance products sold in 2007 were presented in integrated packages, according to UNUM data.