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Dispelling Voluntary Insurance Myths

As if health care insurance wasn't difficult enough for most consumers to understand before, the starts, pauses, and stops surrounding our new health care laws are making the topic even more complicated and confusing for insurance consumers. No matter what happens with the current health care legislation, voluntary insurance is one segment of the health care industry that will fortunately remain unchanged.

There are multiple factors, from the economy to rising health care costs, propelling the need and demand for voluntary insurance among employers and their workers. In other words, the iron is hot. However, there are still a lot of misinformed consumers and clients that have some serious misconceptions about voluntary insurance. Given the growth surge, agents and brokers couldn't ask for a more opportune time to address some of these common misconceptions. One recent survey on voluntary insurance revealed the following five misconceptions among employees, employers, and HR departments.

1. Myth - The doctor is always paid directly for medical bills.
The survey showed that over half of employees and decision makers within HR thought voluntary insurance plans always directly paid the doctor for medical bills.

In reality, this is true of major medical insurance plans, but not of voluntary insurance. When a service or expense is covered under the plan, the major medical insurance generally pays the health care provider directly. On the other hand, the purpose of voluntary insurance plans is to make a payment to the policyholder to help them cover the out-of-pocket expenses not covered by their major medical plan. Such expenses may include deductibles, co-payments , or their day-to-day living expenses.

2. Myth - Payouts are limited to only specified medical expenses.
The survey showed that around 66% of employees and 62% of decision makers within HR thought that a voluntary insurance policy benefit payout could only be used for specified medical expenses.

Again, this is true of major medical plans, but not voluntary insurance plans. Unless the policyholder assigns otherwise, the cash benefit is paid directly to the policyholder. The benefit can then be used however and for whatever the policyholder sees fit.

3. Myth - Employers have a cost in offering voluntary insurance benefits.
Only 44% of the surveyed employers believed that voluntary insurance benefits don't have any direct costs for them.
The truth is that voluntary benefits don't directly cost the employer anything. Thinking otherwise can be a costly mistake for employers. This is especially true when an employer is trying to offer quality, desirable, and needed coverage options as they're simultaneously trying to find ways to keep their health care costs under control. Additionally, offering voluntary insurance policies could cut FICA tax contributions and reduce corporate taxes; help make a company's benefit package more competitive; and, overall, help a company meet budget goals/constraints.

4. Myth - It costs too much.
Over half of the employees and a third of decision makers in HR departments surveyed thought that supplemental insurance plans cost too much.
Voluntary insurance doesn't create a financial burden, but rather exists to provide families a broader range of insurance coverage and protection by actually helping to ease the financial burdens frequently following an unexpected injury or accident. Most providers of voluntary insurance offer an array of products to fit most any budget size. Some of the leaders in the industry offer basic insurance coverage options, including life insurance, sickness, and accident, at a standard rate of around $12 per week.

5. Myth - Employers are responsible for paying most, if not all, of the voluntary insurance premiums for their employees.
Of the decision makers within HR departments surveyed, the above misconception was believed by one in every four.

While some employers voluntarily opt to contribute a portion of the premium cost, most voluntary insurance plans are 100% employee-paid. Most workers actually find it beneficial that they pay the premiums unassisted. This allows them to have a more portable coverage and gives them the ability to tailor their purchase to the amount and type of insurance they need and want.

In closing, considering that voluntary benefits are one of the few areas not affected by health care reform legislation and is an area of the insurance market rapidly growing in demand, it's important for agents and brokers to take this opportunity to dispel the myths and help clients and consumers become well-informed.