Presented by Benefitfocus: 2019 Consumer Benefits Coverage Index
  • Industry Trends & Insights

What Impact Does Life Stage Have on Employee Benefits Decisions?

Much has been made of the rising level of diversity in the workforce – and its implications for employee benefits – over the past several years. The bulk of that discussion has centered on the five generations converging the workforce, and the wide range of preferences and expectations resulting from that convergence.

But while generational differences are an important consideration in the design and communication of a benefits program, workers' coverage needs are perhaps more heavily aligned with the stage of life (or career) they're currently experiencing. Thirty years from now, for example, millennials' perspective around benefits will have likely changed quite a bit from what it is today.

The Consumer Benefits Coverage Index™ (CBCI)

A few weeks ago, Benefitfocus introduced the first-of-its-kind Consumer Benefits Coverage Index™ (CBCI), which creates a new model for evaluating how well people's benefits portfolio meet their expected needs.

CBCI establishes approximate ranges of optimal and sub-optimal coverage based on how similar or dissimilar an individual’s benefit spending is to their peer group across three key categories of voluntary benefit products: health, wealth and lifestyle. Each category is scored on a scale from 0 to 100 – with an aggregate score range of 0 to 300 – reflecting the average amounts spent by a consumer in these categories relative to their peers.

Consumer Benefits Coverage Index

Scores in the lower range indicate a need for greater awareness of the benefits available, while scores in the upper range indicate a need for more personalized benefit decisions. Ideally, workers would fall in the middle range, which indicates a balanced benefits portfolio that generally aligns with their peers, but also takes into account their individual circumstances and needs.

Impact of Life Stage on CBCI Scores

Recognizing that a consumer’s benefit needs are heavily influenced by life stage, Benefitfocus' 2019 Consumer Benefits Coverage Index Report highlights three unique worker personas – in addition to studying the typical U.S. worker – to better understand how stage of life impacts benefit spending behavior and coverage situation.

Each persona represents a unique set of needs to be considered in the context of their benefits portfolio.

Consumer Benefits Coverage Index by Stage of Life

Like the typical U.S. consumer, each life-stage persona currently has a benefits portfolio in which wealth and lifestyle products are out of balance. The Prime High Earner’s wealth CBCI is very close to the ideal range, however, and actually puts their overall CBCI score within the ideal range.

First-Timers, those consumers age 18 to 34, are experiencing many “firsts”—starting their career, living on their own, selecting benefits on their own, getting married, buying a house, etc. It’s essential for these individuals, whose expenses can be high while income remains low, to have adequate protection against unexpected events while maintaining the ability to put money toward things like paying down student loans, saving up for a mortgage and initiating long-term wealth.

Currently, First-Timers have the lowest CBCI scores among the personas. They’re also spending the least amount on voluntary benefit products, both overall and as a percentage of their annual salary (roughly 1.2 percent). While spending on voluntary benefits likely does put a relatively greater strain on First-Timers, the data suggests that these individuals could have significant coverage gaps in the wealth and lifestyle categories. Employers, brokers and carriers all have an opportunity to help First-Timers identify these coverage gaps and understand what types of benefit products can fill those gaps in a way that makes financial sense.

Prime High Earners, those consumers age 35 to 54 making $75,000 or more, are at a time and place in life where they’re continuing to build their wealth while also starting to look for ways to preserve their wealth. Consequently, there’s a wide range of benefit products that can be of value to these individuals. And, as high earners, they have more disposable income to spend on such products and a greater opportunity to optimize their benefits portfolio.

Accordingly, Prime High Earners have the highest CBCI scores among the personas. Their total score of 113 indicates a balanced benefits portfolio overall, even though their wealth and lifestyle scores still fall within the low ranges. Prime High Earners appear to be taking advantage of a wide variety of voluntary benefit products, spending a median of $2,573 in annual voluntary premium—nearly six times more than First-Timers and nearly twice as much as Near-Retirees. Despite those large differences, however, voluntary benefit spending only represents 2.2 percent of Prime High Earners’ annual salary—the same relative amount spent by Near-Retirees.

Near-Retirees (and Retirees), those consumers age 55 and up, have very different needs and considerations. While trying to maximize and preserve their retirement funds, they also need to evaluate new options for their health care, along with a variety of supplemental coverage options.

While their overall annual voluntary benefit spending is significantly higher than that of the typical U.S. consumer ($1,352 versus $873), Near-Retirees are similar to the typical U.S. consumer in that their wealth and lifestyle spending are largely out of balance. Near-Retirees could likely benefit from additional guidance on how various wealth and lifestyle products can help them better protect their retirement nest egg.

To learn more about benefit spending habits and CBCI across these worker personas, download the full 2019 Consumer Benefits Coverage Index Report from Benefitfocus.