New LIMRA research shows important benefits trends

Employers will continue to shift benefits costs to their employees over the next few years. And health benefits are likely to continue to slowly erode as health care reform is implemented. Those were two of the findings in new research LIMRA recently shared with Colonial Life and Unum US business partners. The sessions gave employees in Chattanooga, Columbia, Portland and Worcester an advance look at preliminary results from several new surveys. LIMRA is a worldwide research, consulting and professional development organization and a long-time partner in our company’s research efforts.

According to the research, about half — 52 percent — of employers with 100 or more workers expect a negative effect from health care reform, yet 49 percent haven’t started any long-term planning for it.
The majority — 59 percent — have increased or plan to increase employee contributions toward the cost of medical coverage in the next three to five years. About the same number say they have required or will require employees to pay a greater share of the cost of some or all of their nonmedical welfare benefits in the next three to five years. Nearly as many — 54 percent — have increased or plan to increase deductibles and copayments in that time frame.

However, the majority of employers surveyed say health care reform will have little to no impact on their ability to offer medical or nonmedical benefits. The research defined nonmedical benefits as insurance coverage such as life, disability, accident, critical illness, dental and vision.

Smaller employers seemed a bit more optimistic about the effects of health care reform, with approximately half saying they expect little to no impact on their overall business, their employees, or their ability to offer nonmedical benefits in the next three to five years. But smaller employers are feeling the pain of rising health care costs: It was the number one issue facing those who offer benefits, cited by 60 percent of those surveyed. More than a third — 38 percent — of these employers say they’ll consider switching nonmedical benefits to voluntary coverage to help control rising benefits costs.

“The small business marketplace will continue to feel the brunt of health care cost increases, which, in turn, could further limit benefit offerings,” the report said.

Small employers may have a knowledge gap about benefits options, according to the survey. Of those who don’t offer benefits, 65 percent say it’s because the business can’t afford them, and 40 percent say they don’t have enough employees to qualify for a plan. In fact, employers can offer voluntary benefits such as those offered by Colonial Life and Unum at no direct cost to the business. 

“Continually monitoring employers’ response to health care reform and anticipating their plans for what benefits and how much funding they will offer employees is critical for our entire organization,” said Roz Metzger, director of corporate research. “We have to carefully position our portfolio and access to choices considering the marketplace buzz about future sourcing of medical and nonmedical benefits.”

Unum’s new group hospital indemnity helps ease the financial pain of hospital costs

The rising costs of health care mean one trip to the hospital could cause a serious financial setback due to out-of-pocket costs not covered by a typical medical plan, such as co-pays, co-insurance and deductibles.

To help protect employees from the financial costs of unexpected health events that result in hospitalization or other treatment, Unum (NYSE: UNM) has launched a new group hospital indemnity product.

Unum’s group hospital indemnity product is designed to provide a lump sum benefit when an individual is admitted to the hospital. The coverage offers a rich choice of employer-selected options, including a daily benefit for hospital stays or intensive care confinement.

According to a Health Care Cost Institute report published last year, called Health Care Cost and Utilization Report: 2011, the average price for inpatient hospital admissions rose 5.3% in 2011, outpacing the rate of inflation at 3.2%.

“Employers are struggling to manage the increasing costs of health care and, as a result, are redesigning their medical plans to include more employee funding and increased levels of co-payments and deductibles,” said MaryAnn Beliveau, assistant vice president of product and market development for Unum. “Group hospital indemnity coverage gives them a way to relieve some of that financial pressure by providing their employees with access to reasonably priced coverage that can supplement their medical plans and help them financially when they face a hospitalization.”

According to Marilyn Finley, Unum’s director of product and market development, group hospital indemnity coverage is a great option for families or individuals at all stages of life, whether they would struggle to cover hospital costs due to a lack of savings or because they are facing a catastrophic health event.

“In the event of a major illness or injury which results in hospitalization, group hospital indemnity offers significant financial protection,” she said. “It pays out a lump sum regardless of the cost of care, which can be used to cover co-payments, deductibles and everyday expenses.”

Other employee advantages include:

• Hospital admission benefit included in all plan designs, from $500 to $5,000
• Family-friendly design may include the option for covered employees to add family members
• A wellness benefit is available to encourage better overall health management
• No physical exam is required for eligibility.

In addition to the financial protection group hospital indemnity insurance gives employees, the product also has many employer advantages, including:

• Flexible employer-elected plan designs complement the medical plan employers offer their employees, including an HSA-compatible design
• Plan designs can include outpatient and inpatient surgical benefits and a diagnostic procedure benefit to tailor a plan that fits workplace needs and provides financial protection
• Coverage is 100 percent employee-paid
• Superior education and enrollment support.

“A stay in the hospital can be the source of great stress and worry for both patient and family,” said Finley. “Group hospital indemnity coverage gives employees an easy and affordable way to protect both their family and their finances.”

Unum's 2013 Corporate Citizenship Report

Every day, Unum employees show their commitment to meeting customer needs. But we also place a great deal of importance on supporting our communities, whether it’s through volunteering our time or donating money to charity efforts.

This year’s Corporate Citizenship Report highlights some of the work our employees are doing in their communities, as well as the importance our company places on sustainability, good governance and financial protection benefits education.

“We believe strongly in the value of what we do to help our customers and communities, as well as all of our stakeholders,” CEO Tom Watjen said in the report’s opening letter. “We’re there for our customers during some of the most difficult times of their lives to provide the financial protection benefits they need. Just as importantly, we’re committed to being a good corporate citizen and neighbor by helping making our communities better places to live and work.”

As part of the company’s efforts to protect the environment, a printed copy of this year’s report will not be sent to employees. An interactive microsite is available on Inside and on Unum’s external website.

A Health Care Reform Roadmap

Employers will soon face some critical health care decisions, but most haven't made any long-term plans.  Now, you can advise your clients on a competitive, reform-ready benefits strategy — with these easy-to-use educational tools:

A health care reform roadmap: Key steps and strategies for 2013 and beyond »
This new guide outlines the reform requirements that impact employers the most — such as the "pay or play" decision, meeting health plan requirements, Health Insurance Exchanges and reporting to the IRS. Share it with clients today.

You can't predict the future, but you can prepare for it

Protecting your loved ones and your way of life means protecting your income from the unexpected. Illness, injury, and loss can mean serious financial hardship.

Explore this page to learn more about better benefits at work:

http://unum.me/14HpZQw

Protecting the earning power of American workers

Scott Maker, senior vice president of Government Affairs at Unum, discusses how new partnerships and data are driving the important conversation of income protection. Maker also shares new research that, for the first time, quantifies the value of disability benefits.

http://files.parsintl.com/eprints/73128.pdf

Unum CEO Tom Watjen on CNBC: Insuring Future Growth

CEO Tom Watjen joined CNBC’s Squawk Box last Thursday morning to discuss the need for our products in the midst of a “tepid” economic environment. “We have found demand for the product despite the soft economic conditions,” Tom said.

The discussion also addressed future growth and potential road blocks for our company and industry. Watch the video here and see what else Tom had to say.

Unum posts strong fourth quarter earnings results

Unum reported fourth quarter earnings today which showed solid earnings per share growth and a continuation of positive trends seen throughout the year. This is the seventh consecutive year that Unum has shown EPS growth.

The company reported after-tax operating income of $225 million, or 82 cents per share, compared to $228.2 million, or 78 cents per share, in the fourth quarter of 2011.

Net income was $233.9 million, or 85 cents per share, compared to a net loss of $369 million, or $1.26 per share a year ago, due mainly to charges the company took in its Closed Block business which created a one quarter loss.

Earnings in the U.S. business segment rose 2.3%, as premium income grew 3.2%. The benefit ratio--a measure of claim payouts versus premiums--improved to 84.5% from 84.7%, due in part to fewer claims for group long-term disability

During the earnings announcement, CEO Tom Watjen highlighted the strong performance of the company’s investment portfolio and how that has helped Unum through recent economic challenges, including a continued low interest rate environment.

Results reported from the fourth quarter include:

• Operating income for Unum US increased 2 percent to $212.2 million, with premium income rising by more than 3 percent. The company continued to enjoy solid profitability and margins across most product lines this quarter.

The results continue the company’s “formula” of staying disciplined, delivering on commitments and maintaining a solid financial foundation to both support the business and return capital to shareholders. During the quarter, Unum repurchased another $100 million of stock, bringing the company to $500 million for the full year and more than $2 billion since 2007.

Unum benefits in a post-reform era

Creating a post-reform benefits strategy

It’s expected that the cost of health care insurance will continue to rise. In fact, employers say health premiums will increase by another 7.2% in 2012 — nearly twice the rate of inflation.

As a result, nearly two-thirds of employers surveyed expect to use a wider variety of cost-sharing strategies:2

53% plan to increase the percentage that employees contribute to the premiums

39% plan to increase in-network deductibles

73% will offer employees at least one consumer-directed health plan in 2012, an increase from 61% offering a CDHP in 2011

The supplemental safeguard

These strategies can help businesses effectively manage costs, but they may leave employees financially vulnerable. In today’s challenging economy, a single illness or injury can have a profound impact:

41% of working age adults report they have had to go without medical treatment due to costs.

40% say they are having trouble paying off medical bills.

That’s why supplemental health benefits — particularly accident and critical illness — are growing in popularity. These 100% employee-paid plans make it simple for employees to choose the important coverage they need, with little or no impact to the company budget.

No impact on “Cadillac tax”

These benefits are also reform-friendly for employers. As long as the benefits are HIPAA-excepted, the premium is not part of the calculation used to determine whether a health plan exceeds the “Cadillac” excise tax threshold.

That tax, scheduled to begin in 2018, will place a 40% excise tax on plans with premium that exceeds set government thresholds. It will be levied on insurers (or, in self-insured plans, directly on employers). It is anticipated that insurers will pass some of this tax expense onto their customers.

77% of employers surveyed say they are somewhat to very concerned about this pending tax.5

These Unum benefits are all HIPAA-excepted. Click on the benefit to learn more.

Accident
Critical illness
Disability
Life
MedSupport

Unum recognized for commitment to clear communication

CHATTANOOGA, Tenn.--(BUSINESS WIRE)--Simpler is better. That philosophy drives the approach Unum (NYSE:UNM) takes to customer communication, and recently earned the company a ClearMark Award from the Center for Plain Language.

“This recognition is a great indication of the value of the work we’ve done to simplify our communications in every area of the business,” said Chris St. John, Consumer Strategy director at Unum. “Our industry is complex, so it’s a challenge to make plain language the standard. But we’re focused on making it happen.”

Judges at the recent ClearMark Awards named a guide from Unum the best document in its category. The guide clearly explains how to file a disability claim and what to expect once the claim is filed.
Judges praised the guide’s clear timeline and direct, jargon-free language. The revision of the guide was part of a much broader effort across the company to make Unum’s communications to its customers simpler and more effective.

“Making employee benefits easier to understand and use is critical to helping consumers protect their financial stability,” St. John said. “Individuals are increasingly responsible for choosing and paying for their financial protection benefits. Ensuring they have the information they need in a form that’s easy to understand is a strong focus for Unum.”

Among the ways Unum is making benefits information useful and clear:

• A benefits education site at GetBenefitSmart.com uses a fun quiz and conversational descriptions to help employees learn how benefits are useful at specific ages and stages of life. The site is also available in Spanish at BeneficiosParaMi.com.
• A benefits enrollment platform features a simple, shopping cart approach and a video coach who explains insurance terms in plain language;
• A health care reform information site at unum.com/HealthCareReform offers straightforward explanations of reform and its effects;
• Benefits enrollment booklets include simple education, rates and forms information, and a front-page summary of when and where enrollment events will occur.

Making clear communication an expectation in the world of benefits is an ongoing, collective effort, St. John said.

“Across our business, we work in teams to assess and improve letters, forms and other documents,” St. John said. “We’ve rolled out training across the company to give employees clear, consistent guidance on simplifying their communications.

“We’ve made a lot of progress, but there’s always more to do. We’ll keep at it.”

View Unum’s winning entry in the ClearMark Awards here: http://centerforplainlanguage.org/awards/clearmark2012/unum/.

Top of our game, four years running

The results are in:

For the fourth year in a row, an independent industry study confirms that Unum stands alone as a voluntary benefits provider with no perceived weaknesses1 — from the products we offer to the service we provide.

Unum strengths include - product breadth, services excellence, strong broker and customer relationships, extensive use of technology, reputation for disability product leadership.  This was concluded after an Eastbridge analysis of the TOP 13 voluntary benefits providers.

Unum sustained market leadership as the #1 whole/universale life provider.  #2 in new VB sales and total inforce VB premium.  #3 in critical illness and short term disability sales.

93% of customers are likely to recommend Unum.

Strong third quarter gives Unum nice lift into final stretch

Unum US delivered strong results for the third quarter, with positive sales momentum (up 9 percent thus far this year) and strong persistency across our major product lines. Operating income increased more than 3 percent to $216.3 million, one of our highest levels ever.

“We are in a very strong position and should be proud of the results we delivered this quarter,” said Mike Simonds, senior vice president and chief operating officer. “Our unwavering discipline and focus have helped us deliver these good short term results and make progress on our longer term priorities.”
Among the highlights:

• Unum US sales ended the third quarter at nearly 98 percent of plan and 4 percent over the third quarter of last year.
• Group disability sales were at 103 percent of plan, core group at 104 percent of plan and IDI business continued a very strong year at 111 percent of plan. VB sales were up 2 percent, but short of plan.
• Group premium persistency of 90.5 percent remains well above the annual plan of 87.9 percent.
• As in the second quarter, expenses were favorable, but remain a critical area of focus as we continually look for efficiencies and opportunities to improve.
• Service metrics across customer touch points continued to be strong and remain above target.
• The August implementation of the second wave of the Growth Operations strategy went well. More than 40,000 clients are now doing business with us under this new sales and client management model.

The final months of the year are busy ones. Nearly 40 percent of our sales are expected in the fourth quarter and the environment remains intensely competitive, said Chris Pyne, senior vice president and head of Unum US Sales and Client Management.

“We have good momentum as we head into the home stretch,” Chris said. “We have a good mix of new sales and new business on old cases (NBOC) in pipeline and this positions us well for a strong finish.”
The entire industry continues to struggle against strong economic headwinds, including the impact of historically low interest rates. Unum is analyzing these economic factors carefully and taking the necessary steps to mitigate the impact to our business.

“The interest rate environment is certainly impacting us, from returns we see on investments to pricing plans we’re developing for the future,” Mike said. “But we should be proud of our results and our outlook. We are clearly energized and in a good position to carry this momentum through the end of the year.”

S&P upgrades Unum's FSR to A from A-

Standard & Poor’s Rating Services (S&P) upgraded Unum’s financial strength ratings to A from A- based on our strong capital foundation and operating performance.

In its announcement, S&P noted that two primary factors were behind the decision to raise our rating: company performance that has exceeded our peers’ for several years, and improved business diversification through increasing supplemental and voluntary product sales. The agency also noted that despite a weak economy, they expect Unum to continue producing consistent operating results and diversifying its business profile over the next couple of years.

This is the second time in two months that our financial strength ratings have been raised, with Moody’s issuing an upgrade in August. With today’s action, all four rating agencies have now upgraded us since early 2010. This is good news in the current economic environment and contrasts with the generally negative outlook ratings agencies have on our industry as a whole. 

 This positive news is another indication of our financial strength to our customers, distribution partners and the financial community

September is a perfect time to broaden your business

September is Life Insurance Awareness Month and a perfect time to broaden your business.  Tell your clients about Unum’s life insurance, which provides flexible benefits to employees, plus excellent education and enrollment solutions.

It’s never been a better time to help your clients assess the financial protection needs of their employees. When many families have little or no savings to help with the high costs of final expenses or pay for a period of long term care, life insurance can be more valuable than ever.

With Unum’s life insurance, first-time buyers can get an affordable amount of coverage with the option to purchase more at later enrollments — with no health questions. The streamlined enrollment process makes it easy for employees to sign up. Plus, Unum provides effective employee education at no extra cost — something that your clients will appreciate.

Build business, while also building life insurance awareness for your clients. Remind your clients about Unum’s life coverage and other important voluntary benefits — and revenues will follow.

Industry review finds steady rise in LTD claims

In its seventh annual Long Term Disability Claims Review, the Council for Disability Awareness reports that more than 662,000 people received about $9.3 billion in long term disability insurance payments from CDA member companies during 2011.

The number of long term disability claims has increased industrywide each of the past four years. This year’s results represent a 2 percent increase in payments and a 1 percent increase in the number of people receiving those payments over 2012, according to the study.

Seventeen CDA member companies representing more than 75 percent of the commercial disability insurance market contributed disability claim data for this year’s survey. Though long term disability claims were up overall, claims incidence results were mixed at individual companies across the industry. Incidence refers to the number of claims per 1,000 insured lives per year. The report found:

• 43 percent of participating companies reported increased claim incidence from 2010 to 2011
• 38 percent reported incidence as flat from 2010 
• 19 percent reported lowered incidence
• In 2010, 56 percent of participating companies reported increased claim incidence

“Similar to the majority of respondents to the survey, we have seen a slight increase in the incidence of long term disability claims at Unum over the past few years,” said Kevin Huber, assistant vice president of Benefit Metrics and Analysis. “This has been driven to some degree by aging of our insured block and the economic environment.”

According to the CDA report, most, but not all, companies participating in the survey cite the economic environment as a factor in increased claims incidence. Participating companies reported insured lives declined by 0.5 percent from 2010 to 2011, reflecting the third straight year that the number of wage earners insured for long term disability has declined. The number of employees insured in employer sponsored plans has declined each year since 2008.

Since 2005, the CDA has conducted the annual review of long term disability claims among the U.S. working population. The review summarizes long term disability insurance claims data gathered from the annual CDA member Long Term Disability Claims Survey.

Unum is a founding member of the CDA, a non-profit group governed by 18 leading disability insurance companies. David Leopold, senior vice president and chief marketing officer for Unum US, is a member of the council’s board of directors.

Based in Portland, Maine, the CDA is dedicated to raising awareness of the challenges of disability and providing education about disability insurance protection.

Read the full claims report here.

A better benefits prescription for hospital clients

Unum continues to refine its focus on the hospital segment in the group, voluntary and individual disability markets. Its Health Care Practice team, led by Tiffany Breau-Metivier, director of market development, is helping to create best practices that support new sales, service and persistency.

It’s easy to see why we are focused on the health care market. Unum provides group benefits to more than 1,500 hospitals, representing more than one million health care employees. In the National Client Group (NCG), healthcare makes up the largest customer segment with one in five customers coming from the health care industry. Additionally, Unum provides voluntary benefits to more than 700 hospitals customers, making it Unum’s largest VB segment.

As we focus on this market, our goal is clear: deliver innovative solutions that help hospitals address their cost and patient care challenges, while making it easier for them to do business with Unum. From training Unum employees on the challenges that hospitals face, to streamlining the services we offer, we are developing solutions to meet the unique needs of these health care customers.

“Hospitals want to work with carriers that have experience working with clients in the health care field,” Tiffany explained. “To ensure that we are meeting their needs, we are investing in training and knowledge management tools for our disability specialists and claims teams. These tools will help them gain a deeper knowledge of this industry and its unique requirements.”

Hospitals are “staffing sensitive” operations, and, due to employee demographics and work demands, they usually experience higher levels of employee absence. Couple this with the need to provide around-the-clock patient care, and it’s no surprise hospitals want to work with a carrier that can provide fast, effective claims management and support.

For our health care clients, Unum is now offering 24/7 intake and employer notification when a claim is filed. Regardless of the time of the day, within three to five minutes of receiving a claim request, an email is sent to the appropriate contact at the hospital notifying them of the claim and the employee’s absence.

“The goal of this offering is to help the hospital find a replacement as soon as possible by alerting them to the claim as quickly as we can,” Tiffany said.  Additionally, Unum is now involving a nurse case manager in all complex clinician claims. The nurse case manager will interact directly with the clinician claimant and work alongside the disability benefits specialist to help answer claimant questions and provide an additional layer of customer support.

“This added clinical support is a natural extension of our value proposition,” said Tiffany. “Hospitals aren’t just looking for vendors they’re looking for partners. And claimants that are clinically-trained are more comfortable talking to others who are well-versed in their diagnosis. It’s about providing a customer experience that demonstrates we understand not just the industry, but those who work in the industry.”
Many hospitals these days are interested in transitioning away from traditional sick bank models that allow employees to accrue up to 26 weeks in sick time to use for short-term leave.

“These models can be cumbersome to administer and costly for the employer,” said Tiffany. “They can create gaps for less-tenured employees and because they are not always administered consistently, they can also raise compliance issues for the hospital.”

The Health Care Practice Team is working on a consultative service that will help hospitals better understand the trends that influence their current and potential costs. Through this tailored and customized approach, Unum can provide a roadmap to help control these costs that are unique to a hospital’s workforce and culture.

The Team is also looking at ways to measure the impact of programs that help reduce lost time, such as return-to-work programs, health and productivity reporting and sick-bank program alternatives.
“We partner with our hospital customers in such unique ways to help them minimize costs and limit absences while still improving patient care,” said Tiffany. “So it’s important for us to be able to measure the value of the solutions we can provide.”

There are more things to come from this team. They continue to look at developing additional programs to address cost, quality and patient satisfaction for hospitals, with a focus on the aging workforce and nurse engagement and productivity. They are also looking for way to help support physicians, such as new plan design offerings and integrated support services.

Year after year, 3 + 3 still the key to benefits education

Unum’s annual study of American workers finds that enough time and the right tools are still the key ingredients to an effective benefits education.

“This is the fourth year we’ve conducted this study, and our research has consistently found that the key to an effective benefits education campaign is a three-plus-three communication strategy,” said Kelly McClusky, director of marketing communications at Unum. “Allowing employees at least three weeks to review information, and providing that information in at least three formats, adds up to a better benefits education and enrollment experience.”

A positive assessment of benefits education is strongly related to overall workplace satisfaction. The research shows that four in five (82%) employees who rated their benefits education highly also rated their employer as an excellent/very good place to work.

“When employers give their employees enough time and resources to learn about benefits, the payoff can be positive for both the employer and the employee,” McClusky said. “We consistently see that when employees experience an effective approach to benefits education, they also have higher levels of engagement, morale and loyalty.”

The study of more than 1,100 employed adults by Harris Interactive was completed following the 2011 benefits enrollment period.

To better meet the various learning styles among employees, the results indicate offering education materials in at least three formats is a critical part of the benefits education process.
According to the study, 90 percent of employees who were asked to review their benefits within the past year used the information made available to them. Printed materials, employer emails, personalized statements and employer intranets were among the most likely to be utilized:

• 66 percent of employees used printed materials or brochures to learn more about their benefits when given the opportunity.
• 59 percent of employees who had access to personal statements utilized them to get information about their benefits.
• 58 percent of employees accessed information on their employer’s Intranet or from email communications from their employers when it was offered.

Unfortunately, the study also reveals that employee access to benefits resources has remained significantly lower than 2008 levels.

Equally important as offering employees the right amount of resources is giving them three weeks or more to review their benefits choices and information before making a decision.

Those who had three or more weeks to review benefits materials prior to the close of enrollment were significantly more likely to rate their benefits and their benefits education as excellent or very good, compared to those with less than three weeks to enroll.

The research shows that 96 percent of employees who had three-plus weeks to review their benefits education materials said it was enough time—but only 48 percent of respondents were given that much time.

An effective benefits education strategy can enhance employees’ appreciation of their benefits, the research shows. Eighty-one percent of employees with an excellent/very good benefits education rated their employee benefits package as excellent or very good. Conversely, only 27 percent of employees who rated their benefits education as fair/poor said their employee benefits package was excellent or very good.

Understanding voluntary benefits needs - Unum's CMO David Leopold explains

There is a nice value equation for employers to offer voluntary benefits, says David Leopold, SVP and chief marketing officer at Unum. Watch as he shares a few key data points and which type of employee is actually buying voluntary products:

http://ebn.benefitnews.com/video/voluntary2726126-1.html

Moody's upgrades Unum's financial strength ratings

Moody’s Investor Service upgraded Unum’s financial strength ratings today, attributing the action to the company’s improved business diversification, financial flexibility and stable core earnings.

In a press release, the ratings agency said the upgrade reflects “the company’s leading market share in the group long-term and individual disability markets, and the company’s established position in the voluntary benefits market.

“The ratings also benefit from the company’s access to a huge claims database, focus on claims management and return-to-work programs, and its strong position in the group life market,” the press release said. Moody’s also cited Unum’s “good quality” investment portfolio, which has little exposure to subprime mortgages.

“This news is especially gratifying given the continuing uncertainty in the global economic environment and the negative outlooks ratings agencies have on our industry as a whole,” said CFO Rick McKenney in a letter to employees. “Over the last few years, we’ve seen a number of positive moves by these agencies reaffirming our operational performance and capital management strategies, and signaling our strong financial position to our customers and brokers.”

Unum research helps point the way to better benefits education, communication and enrollment strategies

Benefits communication is more of an art than a science, but new research suggests a tangible tipping point where employees finally begin to understand and appreciate their coverage, which can have a positive ripple effect on their outlook and willingness to go the extra mile for their employer.

A recent Unum survey of 1,147 working Americans who had been asked to review their employee benefits from a variety of providers in the past year reaffirms previous years' findings that link communications to employee satisfaction and loyalty.1 Those employees who rated their benefits education highly were more than twice as likely to agree that their employer cares about their well-being than those who found their benefits education lacking. 


Barbara Nash, Unum's VP of Corporate Research, continues to be impressed by just how strong the correlation between an effective benefits education and employee satisfaction with their workplace has been since Unum's annual survey was first conducted in 2008. 


"We also have consistently seen that it really matters that employees have enough time to review their benefits materials," she says, adding that the more tools made available in different formats to employees the sunnier their outlook will be about their benefits and employment.  But the trouble is that "there really hasn't been much improvement in how employees view their situation with their employers since 2009," Nash explains, noting a slow but steady decline in morale. "Right now, employees are not feeling the love," despite fewer layoffs and salary freezes within the past year.


The power of a 3+3 benefits communication strategy


This collective body of research, whose key findings have been consistent through the years, led Unum to recommend a compelling "3+3" communication strategy featuring at least three weeks of benefits communication before annual enrollment and three methods of learning – hence, the numerical description. When these approaches are fused together, Nash says "that's when employees say they really understand their benefits and feel comfortable in their decision-making."  The fact is that people learn in different ways. Some are more visual, while others prefer to hear information explained or use interactive tools, according to Nash.


Value of voluntary benefits


One way employers can design a more competitive benefits package, especially during austere times, is through voluntary plans whose wide variety of products and coverage options appeal to an increasingly diverse workforce. Accident and critical illness insurance are examples of benefits that can help ease any financial impact of medical coverage gaps, including (but not limited to) employees who pay higher out-of-pocket costs for their health care. Employees who are offered voluntary benefits are more likely to indicate strong satisfaction with their benefits package than those who are not offered voluntary benefits (56% vs. 38%).


Nash says "the nice thing about voluntary benefits is that it allows employers to provide more options to their employees" without having to pick up some, or all, of the cost. And unlike employer-subsidized coverage, HR needn't be concerned about negative reactions among employees that can occur if a benefit is discontinued due to budget tightening. There's also the issue of portability: Employees who leave for another employer can always take those benefits with them.

However, employers are not always in synch with what employees value in voluntary benefits. For example, employees believe that critical illness insurance is as important as life and disability insurance, but only 19% of employees who had access to voluntary benefits said that their employer offered critical illness insurance as an option.

Among the top reasons employees selected for purchasing a new voluntary benefit offering:

• 41% cited the convenience of payroll deduction
• 33% said it's cheaper to buy through the workplace than on their own
• 28% said they felt more financially secure
• 22% thought their employer made a compelling case for purchasing such coverage
• 22% felt the benefits cost less than they expected; and
• 18% cited portability if they should change jobs.

Courting younger workers


The findings suggest that it's critical for employers to take benefits education more seriously, especially with younger generations for whom the information can be so new and difficult to understand.   Despite being known as an Internet-savvy group, Nash says members of Gen X and Gen Y are not heading to the Web to seek out more information about benefits. "If anything," she explains, "younger workers are going to turn to their friends and family members to help them if they need more information than what they get from their employer."

The danger, of course, is that they may not fully understand or appreciate their benefits unless the employer implements a benefits communication and education effort that provides employees sufficient time and tools to effectively make good benefits choices.


To learn more, visit unum.com/education.