Voluntary Benefits: A Tool For Attracting And Retaining Top Talent
If you’re like most employers in today’s dynamic labor market, you’re probably looking for ways to get an edge with current and prospective employees. A simple and cost-effective way is to boost your compensation package with voluntary benefits. In fact, 9 in 10 employers currently provide voluntary benefits so by adding them to your offerings, you’ll be competitive in the market. What do you need to know to get started? Let’s find out.
In this article, we’ll discuss what voluntary benefits are, the most common types, advantages they offer your business, their cost, and how to get started with these offerings. After reading this, you’ll be able to decide if adding voluntary benefits to your package is the right step for your business.
What are voluntary benefits?
Voluntary benefits are supplemental products and services that employers can offer to employees at little or no cost to you. Instead, they are typically paid for 100% by your employees through payroll deduction. Most coverages are also portable, meaning your employee owns them and can take the insurance with them when they leave or retire.
Why are these benefits important?
Voluntary benefits can offer several key advantages to your business.
- Increased employee satisfaction: Since voluntary benefits typically cost employees less than if they purchased the products on their own, you’ll increase their satisfaction levels by enabling them to secure benefits they want at a better price.
- Greater recruiting position: 70% of workers say they’re more likely to work for an employer that offers employee-paid voluntary benefits. By giving employees access to additional benefits that they can customize to meet their needs, offering voluntary benefits will elevate your standing as an employer of choice.
- Enhanced engagement and productivity: 55% of stressed employees who are distracted by their finances spend 3 or more hours each week at work dealing with the issues. Since many voluntary benefits provide employees financial protection, they can help reduce financial stress so employees can focus more on their work responsibilities.
The good news is that you don’t need to be a large company to realize these advantages. While some plans may require a minimum number of employees like 3 or 5, that’s not the case with all voluntary products. Depending on the policies you decide to offer, you may be able to offer some coverages, like dental insurance, even if you just have 1 or 2 employees. And your employee count can include part-time workers as long as they work the minimum number of hours to be eligible for coverage.
What are the most popular voluntary benefits?
Some of the most common voluntary benefits employers offer include:
- Dental insurance: There are a range of options when it comes to dental plans, which can cover just preventive care to restorative services and major procedures.
- Life insurance: These policies pay out a cash benefit to a beneficiary upon the death of the employee. They are the same as individual offerings available through insurers, but are typically less expensive.
- Vision insurance: Voluntary vision insurance usually covers glasses, contacts, and preventive screenings.
- Disability insurance: Either short- or long-term, this coverage pays out periodic payments when an individual is unable to work due to an illness or injury.
- Critical illness insurance: This type of coverage pays out a lump sum cash amount when the policyholder is diagnosed with a specific condition like cancer, kidney failure, or Alzheimer’s.
- Hospital indemnity: This coverage pays for benefits that may not be covered by the employee’s regular health insurance when they’re hospitalized.
- Wellness programs: Traditionally positioned as a voluntary workplace benefit, a voluntary wellness program would give employees access to resources not otherwise available to them such as work/life balance programs, stress management classes, or nutrition services.
- Pet insurance: Pet owners spend almost $70 billion on vet costs but only 10% of dogs and 5% of cats are covered by medical insurance. This voluntary benefit covers the cost of pet care such as annual exams as well as illnesses and emergency care.
- Long-term care insurance: This coverage addresses either home or institutional care when an individual is no longer able to perform activities of daily living.
- Identity theft coverage: This policy type provides protection against data breaches and can include access to monitoring tools, stolen fund reimbursement, and more.
- Mortgage protection insurance: This insurance pays the lender in case the employee passes away before their mortgage is paid off.
- Pre-paid legal services: With these policies, employees can get access to affordable assistance with legal advice, house closings, will drafting and other services.
- Student loan debt repayment: These plans, which are one of the most in-demand right now, take many forms but generally, you agree to pay a specific amount towards an employee’s student loan debt or reimburse them up to a specific amount of what they paid in the year.
Do these benefits cost the employer?
Voluntary benefits are typically 100% employee paid. However, some companies contribute partially toward the cost of these benefits.
How to Best Get Started with Voluntary Benefits
As you can see, voluntary benefits can be a cost-effective way for you to better engage employees. The key to getting started is understanding what products will make the most sense for your workforce.
The first step is to consider the demographics of your workforce or survey employees to find out what they want. Then benchmark against your peers to see what others are offering. Once you settle on offerings, make sure you promote their availability during open enrollment just like you would traditional insurance like health coverage. Lastly, to drive enrollment, be sure employees understand how these benefits work. This is especially important because 31% of employees say they don’t fully understand the benefits they select.
For more guidance on understanding what benefits employees want today, read our next article on the top trends today.
Editor’s Note: This blog was originally published in December 2021 and has been updated in October 2022 to be more comprehensive.