- Employer contributions to the plan costs, even relatively insignificant ones.
- Employer's staff intervention on behalf of an employee in day-to-day carrier dealings.
- Tying participation in the voluntary plan to eligibility for other benefits.
- Listing the voluntary plans alongside traditional ERISA programs in companywide communication materials.
- Placing the employer's logo on a voluntary product carrier's marketing materials.
- Publicly taking credit for introducing the benefit.
- Company managers and supervisors actively recommending voluntary benefits to rank-and-file employees.
Friday, November 18, 2011
Thursday, November 3, 2011
... What's fueling the growth [in voluntary benefits]? "Health-care costs are eating away at profits, and not only are employees being asked to pay more, but often their pay is frozen or increases are minimal," observes Leonard Sanicola, senior practice leader at WorldatWork, a nonprofit association based in Scottsdale, Arizona, that focuses on compensation and benefits. "Voluntary benefits allow companies to offer something in return at a time when economic and business conditions are challenging." Undoubtedly, insurers have picked up on the trend; AFLAC, for example, has built its whole business on selling insurance through employers.
Thrown A Bone
... Indeed, offering a choice of vendors is crucial for avoiding the major potential pitfall of voluntary plans: the risk that a vendor problem will trigger an employee lawsuit against the employer. [And note that virtually no employer actually offers a choice.] A choice underscores the point that the employees, not the employer, are responsible for vetting and selecting vendors. According to attorney Richard Menson, a partner at McGuire Woods LLP in Chicago, a company should explain that its affiliation with a vendor does not constitute an endorsement. "I would be clear to employees that they are on their own as participants, and that the plans are not subject to the Employee Retirement Income Security Act," he says. Menson adds that he hasn't seen any ERISA suits over voluntary benefits go to court—because corporations are prudent about how they communicate voluntary benefits, and because most cases with merit are settled before trial. As an added safeguard, most insurance vendors provide employers with indemnification clauses that hold corporations harmless in case of any trouble.
But the fact that legal liabilities are relatively easy to avoid doesn't mean an employer can choose vendor alliances carelessly. A mediocre vendor reflects poorly on the corporation and damages any goodwill earned from offering the voluntary benefit in the first place. "There's still a great responsibility for the company to screen its vendors," observes Pete Fornal, president of HR Consultants, based in East Greenwich, Rhode Island. "If your employees' customer-service experience is not good, you need to change providers."
Talk Is Not Cheap
One key mistake employers make is not in how they choose the voluntary benefits to offer, but in how they communicate those benefits to their workers. "Employers think that the only time they need to communicate is during annual enrollment," says Herbster. "They communicate it once and then forget about it." She advises employers to have a link that describes benefits—and allows for registration—on a Web page that workers access frequently.
Another way to communicate, points out Aon's Sullivan, is to hire an enrollment company. Enrollment companies—such as Worksite Communications in Tallahassee, Florida, and Ward Services in Columbia, South Carolina—specialize in getting employees to sign up for programs through one-on-one meetings and telephone- and Web-based services. "You can't just jump in and do 10 voluntary benefits overnight," warns Sullivan. "Talk about 2 or 3 at first."
Above all else, experts encourage employers to be honest in their communications—even if that means admitting that the voluntary benefits are as much about saving corporate dollars as they are about pleasing pet lovers.
But the process of vetting vendors and communicating with employees takes time, which is why not every company offers voluntary benefits. "It takes effort to communicate about the benefits, sign everyone up, and process the paperwork through the payroll system," says Fornal. That effort, however, may pay off in better employee morale—no small thing these days, when workers are forced to dig ever deeper into their wallets.
Ilan Mochari is a freelance writer based in Cambridge, Massachusetts.