BENEFITS BUSINESS
By Len Strazewski
Employers find new ways to offer low-cost
benefit opportunities to their employees
New options--which can include novelties such as identity theft insurance and medical insurance for pets-- may seem a bit odd to employee benefits traditionalists, [but] proponents say they add real value and receive great employee recognition.
Employers continue to fret about the big employee benefit issues, such as exploding health care costs and shrinking retirement accounts, and they frequently tell their agents and brokers that they can't afford to add any new benefits for their workers.
But, say employee benefits experts, that doesn't mean that they aren't trying to differentiate themselves from less enlightened employers by looking for new low-cost or employee-pay-all opportunities to meet some of their employees' needs.
And while some of those new options--which can include novelties such as identity theft insurance and medical insurance for pets-- may seem a bit odd to employee benefits traditionalists, proponents say they add real value and receive great employee recognition.
"The more employers have to pay for traditional benefits such as group health insurance, the more sensitive they are to the overall value of their employee benefits and the level of recognition they receive from their employees," explains Matthew T. Oros, chief executive officer of Benelogic, LLC, an online benefits enrollment service company in Timonium, Maryland.
Oros is also a former employee benefits consultant and a former top producer for CareFirst BlueCross BlueShield of Maryland. He is also a member of the Aetna National Broker Advisory Council.
Launched last year, Benelogic's Web-based benefits enrollment service allows employees to complete their annual enrollment for health and other traditional benefits. In addition, it facilitates a wide range of voluntary benefits, most of which are paid for completely by employees through payroll deductions. They include critical illness coverage, long term care, and prepaid legal insurance, among others.
Early this year, Benelogic was also one of the first employers to buy new identity theft insurance and services for its own 52 employees and also to begin promoting it to clients, says Oros. The benefit is marketed by Identity Safeguards (www.identitysafeguards.com), a Portland, Oregon-based vendor that packages credit recovery services with loss indemnity insurance from American International Group (AIG).
The new benefit is inexpensive and provides a very tangible benefit to employees, Oros says. "Compared to the cost of health insurance, the dollar-for-dollar value is very high. The per-employee cost is minimal, and its perceived value to employees is tremendous," he says.
Why? Everyone fears identity theft, says Richard Kam, president of Identity Safeguards, and for good reason.
For example, identity theft of one sort or another affected 9.9 million individuals in 2002 and cost them $5 billion, according to the Federal Trade Commission in Washington. Institutional losses from these situations totaled $47 billion, Kam notes.
These losses and the resulting media attention have made most people sensitive to their own potential exposure to identity theft, he continues.
"Everyone knows someone who has been a victim of identity theft," he explains. "And anyone who has experienced the problem--or known someone who has--understands just how disruptive it is to a victim's life."
Citing research from California Public Interest Research in Sacramento, California, Kam says that most victims don't realize their problem for six months or more and when they do, they spend from 50 to 175 hours restoring their name and credit history.
Recovery not only creates stress for individuals, but also disrupts their work productivity, he adds, as employees spend their hours calling credit card companies and reporting services to correct their personal information.
Services include a loss prevention education program to train employees about the latest self-protection techniques, weekly credit alerts and 24/7 customer access to case managers who can assist employees with identity and credit recovery. The insurance component, underwritten by AIG, reimburses employees' coverage limits of up to $30,000 for lost income and expenses resulting from identity theft.
Premiums range from $12.50 or $17.50 per employee per month, based on insurance limits. Family coverage is an additional $5 per employee.
Founded in November 2003, Identity Safeguards had signed up six employers to sponsor its services as a voluntary employee benefit and recorded more than 200 employee participants in its first two months of operation.
Among its business alliances that provide support services to clients and assist the company in structuring recovery plans are AIG eBusiness Risk Services, a risk management consulting division of the insurer; Amcrin Corporation, an Internet database company that tracks check fraud, identity theft and other white collar crime; CTP and Associates, LLC, an investigation service that provides forensic accounting and litigation support; and Fortex, a data recovery and network services firm.
Kam predicts more than 5,000 individual participants by the end of June as the company proceeds with a national rollout.
Ernie Strobel, president of Member Extra, Inc., in Arcadia, California, is the broker and administrator of a wide range of voluntary benefits for large school districts and nonprofit groups, including the United Way Retirees and several groups of retired teachers in California and other states.
Member Extra benefit options include group dental insurance, vision care, prepaid legal service, prescription drug discount program, travel accident insurance and long term care insurance, among other benefits.
He says identity theft insurance is a welcome addition to the range of voluntary benefits and recently was adopted by a 2,500-member group of retired teachers in California.
"Identity theft poses serious problems for retirees and other seniors who are more vulnerable to credit damage, excess charges and other fallout from these crimes. As a result, they seem very attracted to a benefit that gives them some defenses and recovery resources."
Pet health insurance is another voluntary employee benefit that is gaining some popularity. Available from specialty insurers as individual coverage for more than 20 years, group coverage has been available for about five years from Veterinary Pet Insurance Co. in Brea, California (http://press.petinsurance.com).
More than 800 employers including General Motors Acceptance Corp., Los Angeles Unified School District, and the Henry Ford Health Systems offer the coverage as a voluntary benefit paid for by automatic payroll deduction.
Premiums begin at $10 per month per pet and vary according to species, age of pet and level of coverage for dogs and cats and special underwriting for exotic pets such as birds.
Coverage is subject to a $50 deductible and pays a schedule of benefits for more than 6,000 medical conditions. Coverage for routine care vaccinations is also available. Policyholders may choose any licensed veterinarian to provide care.
Bill Gorman, Veterinary Pet Insurance group sales manager, says human resource executives and employee benefits managers have shown growing interest in the coverage and perceive it as an inexpensive way to differentiate their employers in competitive human resources markets.
Employers perceive medical insurance for pets as a natural extension of other voluntary benefits that are proliferating, he says.
"We initially began offering the insurance as a group benefit at the request of employers who saw an opportunity to provide a tangible benefit to employees with pets without incurring substantially more employee benefits costs," he says. "Employers realize that pets are important parts of families and that by offering the coverage they are telling their employees they are concerned about all aspects of their family's well being."
The hospital and health care industries, faced with a nursing shortage, have been particularly interested in the benefit, he says.
Gorman says that the insurer targets employers with a minimum eligible workforce of 1,500 and markets primarily through large employee benefits consultants and insurance brokerages. *
The author
Len Strazewski has been covering employee benefits issues for more than 20 years and is employee benefits editor of Human Resource Executive magazine. He has an M.A. in Industrial Relations from Loyola University.