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As healthcare costs continue to rise, so does demand for voluntary benefits. Since many employers find it increasingly difficult to provide employees with a complete benefit package, voluntary benefits have become an ideal solution.
Voluntary benefits are attractive to employers because there is no added cost for the organization.
Employees benefit because they have a variety of insurance options available conveniently in one place — often with lower premiums than if they were to buy individual policies.
What are voluntary benefits?
Voluntary benefits are coverages and products made available to employees for elective purchase though payroll deductions. These programs have four key characteristics:
100% employee-paid;
offered through an employer;
solicited and enrolled through a carrier or enrollment firm;
paid through payroll deductions.
Because of their cost efficiency, voluntary benefits are becoming a central component of many companies’ benefits strategies.
What are some examples of voluntary benefits?
disability income insurance;
accidental death and dismemberment;
supplemental health insurance;
long-term care insurance;
retiree medical insurance;
dental insurance;
vision insurance;
auto/homeowners’ insurance;
prepaid legal services;
pet health insurance;
identity theft insurance;
computer purchase programs; and
adoption assistance.
3 reasons why employers should consider voluntary benefits
Voluntary benefits have emotional appeal and employees have come to expect them.
Typically, they’re free for employers.
They’re easy to implement (most do not have legal and regulatory requirements associated with insurance benefits).
What are the specific advantages of offering voluntary benefits?
Voluntary benefits appeal to both employer and employee needs.
Advantages for employers include:
It’s a cost-effective way to supplement benefit cuts or reductions.
It’s an important tool for attracting and retaining valued employees.
It’s an opportunity to fill gaps in coverage.
It helps differentiate employers from competitors (both in offerings and image).
Advantages for employees include:
Employees access a broader array of benefits that best suit their needs.
There are affordable premiums (often deducted on a pretax basis).
It’s more affordable than buying on their own.
There’s the convenience of payroll deduction.
What process should employers follow when expanding their non-traditional voluntary benefit packages?
Employers interested in rolling out new voluntary benefits must show their support for these products. Employers should take steps to ensure that workers take notice and see the value for themselves and their families, including:
Examine your current benefits package to understand which benefits are popular.
Ask employees what voluntary benefits they would prefer.
Research which benefits are offered by your competitors — current and prospective employees may use this information as a benchmark to evaluate your company.
Seek the source(s) of benefits that offer the most value for the lowest cost (this is important to ensure the success of a voluntary program because of employees’ perceived value).
Determine enrollment logistics.
Provide personalized attention and effective communication via one-on-one enrollment.
Determine service logistics, including support, new employees, terminated employees and re-enrollments.
Initiate an employee communications campaign to educate employees on what voluntary plans are offered and the benefits of choosing them.
Consider offering benefits multiple times per year, not just during open enrollment. This allows employees to focus on one or two voluntary packages versus being overwhelmed with many packages all at once.
Follow up to ensure employees are satisfied and that there are no issues with any of your voluntary benefits.
Are there any fiduciary responsibilities associated with offering voluntary benefits?
Although most employers do not contribute to the cost of voluntary coverage, they still have a fiduciary responsibility under ERISA to police such plans if they engage in the promotion or distribution of benefits information related to these programs or allow payroll-deducted payment on a pretax basis through a Section 125 cafeteria-style plan.
How are voluntary benefits administered?
As the number of voluntary benefits your organization offers increases, more time and resources are required to communicate, administer and manage such programs. Even turnkey products, such as discounts, can be administratively challenging when there are numerous benefits.
To ease this burden, employers can outsource their voluntary benefit and/or discount programs to third-party administrators, automated platforms or service providers. These service providers typically charge a per-employee fee for managing the corporate discount program(s).
Consultants like TruePlan’s advisors have extensive training in all areas of voluntary benefits and can be a valuable resource. They can assist employers in negotiating more favorable benefit and cost terms with insurance carriers and enrollment firms and support the program once it is in place.
How are voluntary benefit outcomes measured?
To ensure that voluntary benefits programs are as competitive and effective as possible, employers should measure their success every 12 to 24 months. Employers can conduct surveys to measure employee awareness, understanding and satisfaction with the voluntary benefits programs.
Companies can also benchmark their portfolios of voluntary benefits against those offered by industry peers and measure participation rates among employees to determine if they are at, above or below industry norms.
Need assistance determining the best voluntary benefits for your organization? Contact TruePlan Benefit and Retirement Advisors today. Our team of experts will review your current plan offerings and determine which voluntary benefits are right for you.
This Benefits Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice. © 2024 Zywave, Inc. All rights reserved.