Picwell Blog

Picwell Insights: Who Enrolls in Supplemental Benefits (and Who Should?)

Oct 21, 2022 11:05:02 AM / by Picwell

As we covered in our last blog post, supplemental benefits can be an important part of an employee's total benefits package. According to the most recent Aflac WorkForces Report, “more than half, 51%, of all American workers view supplemental benefits as a core component of a comprehensive benefits program,” and, while only about one-third of employees had access to supplemental benefits through their employers, most employees stated that the need for supplemental insurance has been increasing.

How Many Employees Enroll in Supplemental Benefits?supplemental benefits

Among the most commonly offered supplemental benefits, Aflac reported that more than half of employees enrolled in life, dental and vision insurance through their employers. Accident, hospital and both short and long term benefits also saw fairly high takeup rates, with approximately one third of employees enrolling in these types of supplemental policies when they were available. Critical illness policies, which provide payouts if an employee is diagnosed with a covered illness, saw slightly lower takeup rates, with 22% of employees enrolling in these policies when offered through their employer.

Who Chooses Different Types of Supplemental Benefits?

The Aflac study shows how often employees select different types of supplemental benefits when they are available, but who are these employees?  We can take a look at our data from last year’s open enrollment period to gain some insight into which employee characteristics are associated with selecting supplemental benefits. In the graph below, we show which factors are significantly associated with selecting accident, critical illness, and hospital insurance policies.

supplemental insurance plans

This graph may be a little confusing at first, so here’s how to read it. For each characteristic, the height of the bar tells you how much more likely an employee is to select a policy compared to someone who is not in that group. For example, when you look at the “High Risk” group, the height of the highest bar tells you that an employee with a high level of risk aversion is 2.23 times more likely to select a hospital insurance plan than an employee who does not have a high level of risk aversion.  If a bar has a value of 1, that means that employees who are in that group are no more or less likely to select that policy than employees who are not in that group.

When we look at this graph, we see the following significant relationships:

  • Risk aversion: Employees with a high level of risk aversion are more likely to purchase all three types of supplemental policies (accident, critical illness, and hospital), but the relationship is strongest for hospital insurance.
  • Capacity to pay: Capacity to pay for unexpected medical bills is associated with selecting all three types of policies, but it only comes into play at a fairly high level.  We observe that once employees get to the point that they can afford $3,000 or more, they are less likely to select supplemental policies. Or, conversely, when they cannot afford that much, they are between 1.24x to 1.78x more likely to select supplemental policies.
  • Income: The relationship between income and supplemental plan selection was inconsistent. We see slightly higher rates of selecting accident and critical illness policies among “middle income” employees, which we define as employees who earn between $50,000 and $150,000 per year.  One interpretation of this pattern is that employees with lower incomes could not afford supplemental benefits and employees with higher incomes did not think they needed supplemental benefits.
  • Age: For age, we show two generations - Millennials and Gen X.  The height of each bar tells you how likely they were to select different policies compared to Gen Z. Millennial employees were more likely to select critical illness insurance than Gen Z employees, and Gen X employees were more likely to select all three insurance types. After controlling for a number of factors, we did not observe that Baby Boomer employees selected supplemental plans at a different rate than Gen Z employees, so we didn’t include them in the graph above.
  • Number of prescriptions: A high number of prescriptions, which we classify as 5 or more, is associated with a higher likelihood of selecting all three types of policies. This suggests that people who expect to need a lot more medical care also want a lot more insurance, which makes a lot of sense.
Interestingly, there were several factors that we would think should be associated with purchasing these plans that did not appear to have any bearing on plan selections. Here’s a list of notable factors that were not significantly correlated with selecting certain supplemental plans:
  • Prior hospitalization
  • Family size and number of kids in the household
  • Deductible of the selected health plan
  • Planning a pregnancy

Each of these factors increase the likelihood that employees would benefit from certain supplemental insurance policies. The fact that they did not appear to be associated with decision making suggests that some employees who would have benefited from these types of insurance policies were missing out on them.

Employees Need Guidance to Choose the Right Benefits

In this era of financial insecurity, it’s more important than ever for your employees to protect themselves against risk - and supplemental benefits help them do that. But, as we explored in this article, many employees don’t know enough about supplemental benefits to make informed decisions during enrollment periods.They need a tool that will help them learn more about these benefits and guide them to the ones they need.

Picwell’s new Supplemental Benefits Recommendations can help reduce these missed opportunities. Supplemental Benefits Recommendations highlight different supplemental policies that are a good match for employees and go even further to provide personalized explanations for why the policy is a good match. With this feature, you can make sure your employees are taking advantage of all the benefits available to them and setting themselves up for success - both physically and financially - this year.

Supplemental Benefits Recommendations by Picwell

Want to see how Supplemental Benefits Recommendations can help your employees? Request a demo today.

Topics: Open Enrollment, Benefits Decision Support, HR Tech, employee benefits, empower wise choices,, supplemental benefits, voluntary benefits, risk aversion, financial wellness


Written by Picwell