Voluntary benefits continue to be important part of employees' benefits packages

Voluntary benefits -- insurance coverage available through employers and usually paid for by employees -- will continue to be an important part of employees' benefits packages as health care reform measures are implemented.

"Even as health insurance becomes more widely available over the next few years, voluntary benefits will be in demand in the marketplace because they help pay expenses not covered by major medical insurance," says Randall C. Horn, president and CEO of Colonial Life & Accident Insurance Company. "Voluntary coverage helps employees strengthen their financial safety net as more risk and costs become their responsibility."

Typical voluntary benefits include short-term disability, life, accident, hospital confinement, cancer and critical illness insurance. They're offered at the worksite, usually through payroll deduction. Employees select and pay for the coverage they want to customize their benefits plan and meet their families' unique needs, although some voluntary plans have a level of employer contribution. Employees can use their insurance benefits to help pay out-of-pocket expenses not covered by major medical insurance, such as deductibles, co-payments, travel to treatment centers, home modifications, or even everyday living expenses that accumulate while they're recovering from an accident or illness.

Even well-paid workers who already have health insurance aren't immune from the cost squeeze of higher health care costs. A study released in March by the Center for Studying Health System Change found the percentage of Americans with a "high financial burden for health care" rose from 14 percent in 2001 to 19 percent in 2006. More surprising, though, is the greatest increases in out-of-pocket expenses were for people with private health insurance, including many middle- and higher-income families.

Most voluntary coverage won't be affected by health care reform.

• Life, disability and accident insurance are excluded from the legislation's provisions.
• Voluntary coverage won't be offered through insurance exchanges.
• Voluntary coverage is exempted from changes to guaranteed issue and pre-existing condition requirements.
• Voluntary coverage is exempted from the excise tax on "high cost" health plans when paid for on an after-tax basis. Accident and disability plans aren't subject to the excise tax even if paid for before taxes.

With its many complexities, health care reform also will contribute to the growing need for effective benefits communication and education, Horn pointed out.

"The shift of more benefits decision-making to employees increases the demand for clear information so they can make the best choices for themselves and their families," Horn said. "As the economy improves and unemployment begins to ease, employers will be more interested than ever in retaining their best workers. Benefits communication helps employees understand and value their benefits package, and their employer's investment in them."

SOURCE Colonial Life