Published by Blake Wilson on November 3rd, 2020

As someone who’s worked in both the group voluntary and worksite voluntary world, I see people get tripped up all the time on the nuanced differences between group and worksite benefits. And, if we’re going to deliver the right benefits to employees, understanding those differences is crucial. I think many people see the relationship between group and worksite benefits as adversarial: it’s one or the other. But, when you look more closely at some of the differences, it’s really a case of choosing the right benefits for the right situation. Let’s take a closer look:

The contract
  • Group – The employer owns the contract with the insurance provider.
  • Worksite – The employee owns the contract with the insurance provider. The difference of the contract being owned by the employer versus the employee leads to many of the major differences that we’ll look at in more detail below.
  • Group – Pricing for group products is generally step-rated for attained age, and underwriting has the flexibility to adjust the rates based on industry, demographics, and experience. With added underwriting flexibility, group products typically have a lower price starting point than worksite products, and may also be able to offer stronger guaranteed issue offerings. However, if the claims experience is poor for the group, rates may be increased. Also, premiums will automatically increase as the employee ages.
  • Worksite – The upside of worksite underwriting is more stability in the pricing of the product, especially if the policyholder purchases at an earlier age. These products typically feature issue-age pricing with level premiums. The carrier is not able to increase rates due to age. On the other hand, the rates tend to be slightly higher and typically have lower guaranteed issue offerings. Underwriting is limited in what they are able to adjust for the pricing of the product. The rates are filed with the state,
Contract renewability
  • Group – Group products are renewed by the employer, and typically would have a two or three year rate guarantee. The employer could choose to cancel the master policy at any time. A carrier could also choose to non-renew a group due to a bad loss ratio, poor participation, or changes in underwriting’s appetite for an industry or geographic location.
  • Worksite – Worksite products are guaranteed renewable and cannot be cancelled by the employer or the carrier. An employer may choose to no longer offer the products or payroll deduct, but since the policy is owned by the employee, coverage will continue as long as the employee continues to pay premium directly to the worksite carrier.
  • Group – Since the contract for coverage is tied to the employer, portability may not always be available and, if it is, may come with added costs or limitations.
  • Worksite – The policy is owned by the individual. While they may have to arrange an alternative form of payment if they leave their employer, they can continue their coverage at the same cost.
Product uniformity
  • Group – An employer will choose a uniform plan design to be offered to the employees. The availability of product features available from a carrier is determined by the situs state of the employer, but some states may still require a separate plan to be offered. Coverage amounts are usually elected in set increments or the choice of a high/low plan.
  • Worksite – Worksite products may be offered with optional riders that are chosen at the employee level, and amounts of coverage may be customized. Since the policy is not based on the situs state of the employer, but rather the employee’s residence, the product features may vary from state to state.
Enrollment communication
  • Group –Group products are often enrolled with group meetings and then self-enrolled by the employees. Unfortunately, this tends to leave employees with little understanding of the benefits being offered, and lower participation in the products offered. However, because the group products are easily built natively onto ben-admin systems, this may make them easier to administer.
  • Worksite – Worksite benefits lend themselves well to one-on-one enrollments with an enroller. Enrollers and pre-enrollment communication help educate employees about their benefits and their options. In these cases, where one-on-one communication is used, employee satisfaction, enrollment rates and engagement all increase.1  However, worksite may not always fit well on a ben-admin platform because of issue age rates or optional riders available. Fortunately, new embedded APIs help overcome those issues.
Employees and employers are counting on us to deliver the protection they need. Group voluntary is excellent for ease of administration and affordability. Worksite voluntary offers long-term financial security, and additional flexibility for the employee’s benefit selection. The key is understanding both types of products and knowing when to use each of them. Ultimately, that will drive better participation, higher satisfaction and winning solutions for employers and their employees.
1 Trustmark and Customer Benefits Analytics, “Who Buys Voluntary and Why: 2017 Enrollment Study.”