By Molly Mulebriar
Over the years I’ve heard a multitude of HR directors and payroll staff members complaining about voluntary benefits and the extra work involved.
“We have to chase debits and credits and the carriers never seem to get it straight!” is a common complaint. “Offering voluntary benefits costs us time, money and headaches. It gives brokers free access to a captive audience while we do all the backend work and they make all the money!”
The Solution
More employers are transitioning their traditional payroll deduction voluntary benefit plans to direct pay plans through a single source point of access. Plan members purchase the benefits they want using their personal checking account or credit card.
In every household in the U.S. between 94% and 95.5% have access to at least one bank account and over 75% of U.S. households have at least one general-use credit card.
Those few who don’t have either can be issued an employer issued prepaid debit card. Employers can use payroll cards, which are reloadable debit cards, to pay employees who do not have bank accounts. These cards allow immediate access to funds and can be used for purchases and bill payments.
Competitive shelf rated guarantee issue benefits abound in the marketplace. How about a $5,000 dental plan for $41 or a $1,000 dental plan for $21? How about a $100,000 term life policy for $4 at age 42? And how about a cancer plan with a strong chemotherapy benefit with a monthly cost of $18? Looking for auto insurance? No problem.
Imagine going to a plan sponsor supported dashboard and selecting any of the following benefits:
- Dental
- Vision
- Disability Income
- Life Insurance
- Critical Illness
- Cancer insurance
- Accident insurance
- Auto insurance
- Homeowners insurance
- Pet insurance
- Ransome insurance
- Personal liability Umbrella insurance
- Marriage insurance
- Trip cancellation insurance
- Jumbo AD&D
- Student accident insurance
- Student athletic insurance
- Short term medical insurance
- Dependent ACA marketplace health insurance
- Virtual primary care and urgent care visits
- Stocks
- Mutual funds
- Certificates of Deposit
- Firearms liability insurance
- Automobile warranty
- Alien abduction insurance
Moving away from broker crafted status quo voluntary benefit plans gives plan members more freedom to choose benefits that fits their individual needs and budgets and gets the plan sponsor out of the voluntary benefits business.
“But what about the tax savings found in Cafeteria Plans? Won’t plan members lose the tax advantages of pre-taxed benefits?” says Jack Naysayer.
“Yes, of course they will. But the tax savings are minimal. What’s the tax savings on a $20 per month benefit? You can’t buy a cup of coffee at Starbucks with it. Besides, when a plan member pays pre-tax they are held captive for a year unless they experience a government defined qualifying event. Forfeiting freedom for pennies on the dollar doesn’t seem like a good tradeoff to me!” says Suzy Payrollopolis.
“Ahhhhhh………….there are mitigating ways around that!” whispers a voice in the back of the room.
“Roll with it baby!” says the HR Director. And they did…………..
