If you’re in the telecommunications industry, you might be wondering if this is the end of an era when it comes to benefits. For years, one of the major perks of working in the telecommunication industry was the rich employee benefits packages companies offered their employees. The low out-of-pocket costs and robust post-retirement healthcare coverages telecom companies provided for eligible employees were an atypical set of benefits that distinguished it from other industries.
But with the cost of benefits insurance coverages skyrocketing in recent years, for the first time, you may be struggling to decide if it’s finally time to start charging employees for their healthcare. In response, many companies are pushing their health insurance carriers to offer up solutions to save these benefits. Or, in the case of a few savvy telecom companies, some have banded together to give themselves the bargaining power to continue offering similar benefits packages at no added cost.
To help you determine your best plan of action, in this blog, we’ll dig into:
- The five main challenges that telecommunications companies are currently facing.
- What programs or solutions to ask your insurance carrier about for long-term care, executive benefits, and retirement plans.
- How a voluntary benefits program like the Telco Benefits Alliance Program can help solve these problems in ways traditional carriers often can’t.
Five Major Challenges Telecommunications Insurance Policy Holders Currently Face
Rising Health Insurance Costs
As healthcare costs skyrocket, many telco companies are grappling with whether it’s time to pass these costs onto their employees. The main way these increased costs are showing up is in the form of higher deductibles. Across the industry, health insurance carriers are declining to cover the types of out-of-pocket costs, including copays, deductibles, and coinsurance, that telco companies are used to covering. Whether it’s Accident insurance, Critical Illness insurance, Dental insurance, or even Pet insurance, the cost of providing these benefits has increased significantly across the board. This, in turn, is having a dramatic effect on employee satisfaction.
Ask Your Insurance Carrier About: Voluntary Benefits Programs
A voluntary benefits program offers employees additional, optional insurance coverage such as Dental insurance, Vision coverage, Life insurance, or Long-Term Care insurance—at minimal additional cost. These programs are usually optional and customizable, allowing employees to choose any voluntary benefit coverage that fits their needs.
To offer this type of voluntary benefits package, you will have to initiate the conversation with your insurance carrier, as these benefits are not standard offerings. While employees often pay for voluntary benefits through payroll deductions, they come at group rates, keeping the costs lower than individual plans. And though there may be minimal administrative fees to manage them, employers usually bear little to no extra cost when offering them since they are voluntary.
Essentially, when employers offer voluntary benefits, they help employees fill coverage gaps left by their primary Health insurance or Disability insurance, enhancing employee satisfaction and retention.
Long-Term Care Coverage Options
Extended care services like nursing homes or in-home care have also seen huge spikes in cost over the years, leading employees to seek out proactive solutions to make sure they’ll be able to afford these services down the line. Beyond this, many state governments have also begun to react to the rising cost of care by encouraging proactive planning for aging populations through legislation.
Seeking to reduce the amount of unprepared and underinsured individuals relying on public assistance programs, Washington recently became the first state to make Long-Term Care insurance mandatory statewide. Several other states are also considering doing the same as of this writing.
Ask Your Insurance Carrier About: Guaranteed Long-Term Care Insurance
Many carriers will not proactively offer Long-Term Care insurance unless specifically asked since it’s not part of standard Health insurance plans. So, make sure to get the full picture by asking about coverage amounts, eligibility requirements, and whether they offer guaranteed issues (which means no medical exams or underwriting). You should also confirm if adding long-term care options as a voluntary benefit will incur additional administrative fees or burdens on your company.
Attracting and Retaining Top Talent
Another struggle for telecommunications companies has been keeping benefits packages aligned with the recent rise in compensation levels for executives. As executive pay has soared, many existing benefit programs, such as Disability insurance, have not raised the level of income they cover accordingly. This has forced current executives to seek out supplemental insurance to cover the shortfall, which they must purchase as individuals rather than through a group plan.
These supplemental coverages are generally expensive and often have strict underwriting requirements, such as medical exams and health evaluations, that can further drive up the price. This gap has dealt a significant blow to telecom companies’ ability to attract and retain high-level executives like general managers, HR execs, and CFOs.
Ask Your Insurance Carrier About: Executive Carve-Out Benefit Plans
Executive Carve-Out benefits are specialized insurance benefits tailored for top-level executives to ensure their compensation is protected in the case of any disability or illness that would require income replacement. These carve-out benefits go beyond the standard group insurance policies that often have coverage caps and limits. Typically, these will “wrap around” your existing group’s long-term disability policy, which might only cover up to 60% of income with its cap. Carve-out programs also usually don’t require detailed underwriting or medical exams. By offering these specialized voluntary benefits, you can attract and retain executive-level talent.
Managing Post-Retirement Benefits
You may also be feeling the squeeze in the high cost of post-retirement benefits such as Health insurance, Life insurance, and other supplemental benefits such as Dental or Vision insurance. These benefits, which serve as a continuation of the employee’s existing voluntary benefits or core coverage, have historically been a key part of the rich benefit packages telco companies could offer.
Furthermore, many telco companies follow the Rule of 85 retirement eligibility rules that allow employees to retire with full benefits when the sum of their age and years of service equals 85. Designed to allow for early retirement, the Rule of 85 has exacerbated the cost issue by making retiree benefits unmanageable for many telecommunications companies as their workforces age.
Ask Your Insurance Carrier About: Post-Retirement Benefits Packages
Ask your insurance carrier about continuing voluntary benefits or creating a tailored post-retirement benefits program that will provide healthcare coverage and supplemental insurance for retirees. Some specific programs may be available that allow retirees to keep their benefits at the same rates they had as employees.
Talk to your carrier about the possible options for managing these costs over time, especially with early retirees. You can explore whether it’s possible to offer voluntary benefits like Long-Term Care insurance or Life insurance at group rates, which could reduce the financial strain on the company while still allowing you to offer competitive coverage to retirees.
Leverage for Smaller Companies
Large companies often benefit from economies of scale when negotiating with insurance carriers, meaning they can secure better premiums and more comprehensive coverage due to their size and purchasing power. On the other hand, if you’re a 20-employee telecom company in Montana, you don’t have the same ability to negotiate lower rates on your own. This puts smaller telcos at a significant disadvantage when trying to offer competitive benefits packages for their employees.
Ask Your Insurance Carrier About: Group Purchasing Options
To solve this, ask your carrier for information about group purchasing programs or alliances, which pool multiple small companies together to create a larger, more powerful negotiating group. This gives them “leverage” to access discounted rates and comprehensive benefits similar to what larger companies enjoy. Some carriers might work with group purchasing organizations that you may be able to join or collaborate with to gain leverage.
How the Telco Benefits Alliance Program Addresses These Problems
If you’re a small business in the telecommunications industry, you may also have already pushed your insurance carrier on the various options for voluntary benefits and realized that they simply aren’t offering affordable solutions to address these issues.
It was for this exact reason that our Telco Benefits Alliance Program was created. By uniting over 50 telecom companies across the country under one umbrella, the Telco Benefits Alliance program allows us to leverage their collective size to spread the risk among a larger population. This, in turn, allows us to negotiate more competitive rates with insurance carriers and provide employees with many voluntary benefits consistent with those offered by Fortune 500 companies.
The unique structure of this program allows you to keep your current insurance carrier and lets your employees keep their existing coverage while still restructuring health plans to fill in gaps by offering other voluntary benefits at a lower cost.
The Telco Benefits Alliance Program Offers:
- $0 Out-of-Pocket Healthcare: Restructure plans to reduce costs and eliminate employee out-of-pocket expenses.
- Supplemental Health Coverage: Including Accident, Cancer, and Critical Illness insurance.
- Guaranteed Long-Term Care Insurance: Offers flexible Long-Term Care coverage with no health questions required.
- Executive Benefit Carve-Out: Provides Disability benefits up to 100% income replacement, wrapping over the top of your existing long-term disability program.
- Pre-65 and Post-65 Retiree Benefits: Allows retirees, both before and after age 65, to maintain voluntary benefits at the same rate.
This incredible alliance program alone has saved many telecommunications companies millions of dollars over the years they’ve been a part of it.
Who Can Join
With over 50 businesses nationwide, the Telco Benefits Alliance Program accommodates organizations of almost any size. We can work with companies that have as few as five employees enrolled in any one of our programs. If you’re a larger company, your bargaining power can also still be enhanced by joining this sizable collective.
If you’re interested in being a part of the alliance, don’t hesitate to reach out to Chad Huff at chuff@hilbgroup.com.