Changing Workforce Demographic Reflected in Employer Benefit Choices

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.

The UNUM report said the aging workforce is creating additional cost pressures on employers, especially in the areas of health, disability, and long-term care insurance. Among other things, UNUM suggests employers layer group disability coverage with additional individual coverage, integrate short-term and long-term disability coverage, and offers work/life balance employee assistance programs to help employees stay healthy and productive.

The report also pointed to a shortage of skilled labor as driving employer voluntary benefit decisions. Employers must compare their benefits offerings with those of other firms in order to compete for top talent.

The change in family structure also affects the workplace, UNUM noted. More women are in the workforce due to necessity as they are single heads of households. The report suggests employers tailor their benefits offering to fit any household - traditional families or households headed by singles. Long-term care and life insurance coverage is especially important to family heads that do not want to be a burden on their children.

Diversity in the workforce is also creating the need for changes in benefit programs. As other ethnic groups increasingly entered the American workforce, employers must deal with the language differences when communicating benefits and also help those from countries whose governments provided benefits to understand why they need to make workplace benefit choices.

The report said providing a broad array of benefits choices will help meet a range of needs, and suggests finding a benefit provider capable of addressing the cultural diversity of the workforce.

The UNUM Buyers Study 2008 is here .