Voluntary Benefits: Why Offer Them?

As employers continue to evaluate their total rewards packages in response to historically low unemployment, voluntary benefits are getting more attention in benefit-plan design. The trend toward voluntary benefits is driven largely by the growth in high-deductible health plans, which shift higher health costs to employees. Employers are incorporating voluntary benefits into their offerings, such as supplemental medical insurance, to help employees cover higher health costs and enable them to customize benefits to fit their lifestyle.

Organizations should design benefit offerings to meet the desires and needs of their employees. Well-designed benefit plans can help companies attract and retain workers in this very tight labor market. According to Employee Benefit Research Institute’s 2018 Health and Workplace Benefits Survey, 19 percent of respondents indicated they are extremely satisfied with their employer’s benefit offerings; 32 percent are very satisfied; 30 percent are somewhat satisfied; 10 percent are not too satisfied; and 9 percent are not satisfied at all. There is room to improve by looking at what voluntary benefits might be included. The survey also reported that 61 percent of employees selecting voluntary benefits do so because of the lower cost versus purchasing on the open market. Employees also like the ease of purchasing these benefits via payroll deductions.

All of this leads one to believe that traditional and non-traditional voluntary benefits will play a more prominent role in benefit packages in the coming years.

Traditional Voluntary Benefits: Many employers already offer traditional voluntary benefits such as short-term disability, life insurance, and vision insurance. In coming years, more employers will also begin to offer gap/medical supplement, cancer and critical illness coverage, and hospital supplemental policies to reduce potential health care costs the employee would be liable for without such policies.

Non-traditional Voluntary Benefits: Most of the non-traditional benefits provide access to services employees can use year-round to obtain something they need, unlike core benefits, which employees only appreciate when they are sick or injured. Some examples of non-traditional voluntary benefits are pet insurance, identity-theft insurance, membership discount programs, auto or home insurance, legal services, financial planning, etc.

According to Employers Council’s 2018 Health, Welfare and Retirement Plans Survey, employers are offering the following types of voluntary insured benefits in Arizona, Colorado, Utah, and Wyoming.