New horizons for employers

Risk & Insurance, April 1, 2004 by Len Strazewski

Exploding health care costs and shrinking retirement accounts aren't the only issues that worry employees. As employers look for new and inexpensive benefits to offer, they are discovering some new concerns they can solve for their workers with employee benefits.

In the context of traditional employee benefits like group health insurance, long-term disability, long-term care and retirement plans, some of these new benefits seem a little odd, but proponents say they respond to real needs--and make a real difference in employer recognition.

For example, identity theft of one sort or another affected 9.9 million individuals in 2002, and cost them a total of $5 billion, according to the Federal Trade Commission in Washington. Institutional losses from these situations totaled $47 billion. These losses and the resulting media attention have made everyone sensitive to their own potential exposure to identity theft, says Richard Kam, president of Identity Safeguards, a Portland Ore.-based vendor that packages identity and credit recovery services with loss indemnity insurance from American International Group.

"Anyone who has experienced the problem or known someone who has understands just how disruptive it is to a victim's life," he explains. Citing research from the California Public Interest Research in Sacramento, Calif., Kam says most victims spend from 50 to 175 hours restoring their name and credit history. Recovery not only creates stress for individuals, but also disrupts their work productivity, he adds, as employees spend their hours calling credit card companies and reporting services.

Services include a loss prevention education program to train employees about the latest self-protection techniques, weekly credit alerts and 24-hour-a-day customer access to case managers who can assist employees with identity and credit recovery. The insurance component reimburses employees up to $30,000 for lost income and expenses resulting from identity theft.

Premiums range from $12.50 to $17.50 per employee per month, based on insurance limits. Family coverage is an additional $5 per employee.

Founded in November, Identity Safeguards had signed up six employers to sponsor its services as a voluntary employee benefit. The firm has recorded more than 200 employee participants in its first two months of operation. Kam predicts that more than 5,000 individual participants will enroll by the end of June as the company proceeds with a national rollout.

Benelogic LLC, an online benefits enrollment service company in Timonium, Md., was one of the first employers to buy the benefit for its 52 employees, says president Matthew T. Oros. "Compared to the cost of health insurance, the cost is minimal and its perceived value to employees is tremendous," he says.

Pet Insurance

Pet health insurance is another voluntary employee benefit that is gaining some popularity. Available from specialty insurers as individual coverage for more than 20 years, group coverage has been available for about five years from Veterinary Pet Insurance Co. in Brea, Calif. More than 800 employers including General Motors Acceptance Corp., the Los Angeles Unified School District and Henry Ford Health Systems offer the coverage as a voluntary benefit paid by automatic payroll deductions. Premiums begin at $10 per month per pet and vary according to species, age of pet and special underwriting for exotic pets such as birds. Coverage is subject to a $50 deductible and pays benefits for more than 6,000 medical conditions. Policyholders may choose any licensed veterinarian to provide care.

Bill Gorman, Veterinary Pet Insurance group sales manager says human resource executives and employee benefits managers have shown interest in the coverage to differentiate their employers in competitive human resources markets. The hospital and health care industries, faced with a nursing shortage, have been particularly interested in the benefit, Gorman says.

He also says the insurer targets employers with a minimum eligible workforce of 1500 people.

Columnist Len Strazewski can be reached at rickletters@lrp.com.