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Opt-In Coverage

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As health-care costs mount, and the complexity of available coverage plans reaches mind-boggling magnitude, retailers are looking for benefits options suitable for the uniqueness of the retail environment. Voluntary, or opt-in, coverage may provide an answer.

“Because in retail there is such a wide range of employees—in terms of level, full-time and part-time status, and geography—and because of the changing complexities of the current health-care system, voluntary benefits are one way to address both,” said Kevin Gazda, associate director of employee benefits, Boston-based Longfellow Benefits.

Designed to supplement existing coverage that a company provides its employees—or to supply needed or desired benefits when none are offered by the employer—voluntary benefits are comprised of two parts: the products and the communications piece.

“Examples of voluntary benefits products include short-term disability, life insurance, personal accident, critical illness/cancer insurance, medical bridge plans, and others,” explained Gazda. “These products are individually owned, fully portable and can be tailored to meet the needs of each employee.”

An employee purchases only what he or she needs, and the cost is deducted from the paycheck, just like any employer-provided benefits. (Although the benefits are free to the retailer, there is a time cost involved as the HR department must set up the payroll deductions, learn the benefits and help coordinate enrollment meetings with employees across the chain.)

Part two—communication—is, said Gazda, critical to the success of any voluntary benefits program. “It doesn’t work for a retailer’s HR department to send out a mass e-mail or letter to the employee roster, alerting them that certain opt-in benefits are being offered,” he said. “For employees to truly respond, and avail themselves of these supplemental benefits, the details of those benefits need to be explained to them, one on one.”

There are two methods for communicating benefits. A company may decide to go the direct route, selecting a company such as AFLAC or Colonial that provides both the products and the communication services. The second option is a communications firm, a consultant similar to a benefits broker who works with various insurance companies. (Communications firms are compensated directly by the insurance company selected to provide the benefits.) There are pros and cons to both, said Gazda, and it is up to each company to decide which route suits it best.

“What is most important to remember,” said Gazda, “is that the key to the successful implementation of a voluntary program is the communications piece.” Some key traits, said Gazda, of a good communications partner include: the ability to research vendor options, negotiate underwriting concessions, provide technology solutions, communicate the benefits, provide compensation statements and service the account.