New normal. Post-COVID. The re-opening. Whatever you want to call it, how people work and how we do business is changing. During the early days of the COVID-19 crisis when employers were looking for ways to cut the cost of doing business, they discovered the rigidity of their employee benefit program. Scaling back benefits is limited to underwriting rules (which insurers bent or revised) and software limitations. Many small business benefit plans are cookie cutter plans built in a technology platform created in the 90’s. Want proof? Sun Life’s Designed for Health papers show how most benefits programs remain unchanged for decades and that most employers are offering the same level of coverage.
Employee survey after survey show that there is a want for plan choice. And the need from employers for plan flexibility will push insurers to update their technology and change not only how benefits are delivered but what options are available to employers and employees.
What could a plan redesigned for flexibility look like?
Employee benefits programs were originally designed to offer insurance to employees. Life, disability, and expensive healthcare items. Over time, low cost items and day to day expenses like massage, vision care and dental were added to plans. Would you pay $550 every year to insure a $500 bicycle? No, you wouldn’t, but that’s exactly what employers are doing with benefits like massage. This traditional plan design of one size fits all, doesn’t fit anyone. And the traditional concept of insuring day to day health and dental expenses doesn’t make good business sense.
The future of benefits is personalized coverage and portability. Flex plans, which offer some personal choice, are already a popular choice for larger employers. Equitable Life has successfully delivered a great scaled down version of this plan design for small businesses.
Imagine an employee having the flexibility to claim day to day expenses that they determine are important, combined with insurance protection. Imagine how that personalization will engage employees and provide them value. This plan option also gives employers a set, predetermined budget for a large portion of benefit program spend plus the flexibility to adjust their spend in steep economic downturns and future unexpected events such as a pandemic. Smart use of AI is already happening with promopts in carriers apps and plan members portals. That's the personalization.
The portability piece is a challenge that I'll review in another post.