Optional No More — The Growing Popularity of Voluntary Benefits
Is your benefits package enough to keep and attract employees?
If you offer your employees a core benefit package — such as health insurance and a 401(k) retirement account — you might think that's enough to attract and keep talented employees. However, a recent survey shows that to stay competitive many employers believe that they must offer a wide variety of voluntary benefits.
The "2018 Emerging Trends: Voluntary Benefits and Services Survey" conducted by Willis Towers Watson found that employers are expanding their choices of voluntary benefits to address workers’ financial needs and overall well-being. More than 69 percent of employers surveyed said voluntary benefits will be a more important part of their employee benefits package in the next three to five years.
Voluntary benefits are supplementary insurance products you can offer your employees at no or low cost to you. You choose which products to offer and whether the company will pay a portion or all of the costs; employees choose the products that best fit their needs and then pay their portion of the costs through payroll deduction.
Also called supplemental insurance or employee-paid benefits, traditional voluntary benefits include life, vision, dental, disability, cancer, critical illness and accident insurance. Non-traditional benefits, such as financial planning, are gaining in popularity as employee needs change.
Why Employers Like Voluntary Benefits
Benefitfocus, a benefits management software company, released a report this year on "The State of Employee Benefits." The report reveals that attractive benefits can make the difference whether a prospective employee accepts a job offer.
Part of the reason employers are considering adding voluntary benefits is because they are looking to address the needs of a changing and diverse workforce.
For example, many employees want to improve their financial situation, and 42 percent of the employers surveyed said they offered at least one of three voluntary income protection benefits (accident, critical illness or hospital indemnity plans) to their employees in 2018. Eighteen percent of the employers offered all three. In addition, participation in identity protection and legal insurance plans increased the last few years by 17 percent and 13 percent, respectively.
Another important reason for the increasing popularity of voluntary benefits is that employers are looking for ways to reduce costs and manage the impact of the Affordable Care Act's cost increases. Some employers are dropping benefits such as life insurance to cover costs. Voluntary benefits let employers shift benefit costs to employees — while employees can purchase these benefits at a lower group rate.
Why Employees Like Voluntary Benefits
As mentioned, employees can purchase voluntary benefits at group rates, making a wide variety of benefits available. The ability to customize benefits that fit their lifestyle is particularly important in today's culture, where advances in technology make it easy to personalize everything from smartphone apps to television schedules. Additionally, many plans are offered on a guaranteed or simplified basis, so employees with health conditions can still get coverage.
Popular Choices
According to a McKinsey & Company's survey, benefits that improve quality of life have grown fastest, with sales of vision insurance up 24 percent and critical illness insurance up 19 percent.
The Center for Financial Services Innovation released a report showing that 85 percent of Americans are anxious about their financial situation. That stress can lead to productivity losses; increased absenteeism and healthcare claims; and reduced turnover of employees of retirement age since they feel they cannot afford to retire.
Some financial worries include:
- Student loan debts
- Parents saving for their children's college expenses
- Identity theft protection
According to the Willis Towers Watson survey, eight percent of employers currently offer student loan consolidation programs, which could increase to 34 percent by 2021. Similarly, 10 percent of employers offer student loan refinancing arrangements, which could increase to 35 percent by 2021. More than half of all respondents offer some form of financial planning and counseling services, which could increase another 10% by 2021.
Other popular voluntary benefits expected to double in popularity by 2021 include pet insurance; long-term and critical-illness coverage; and hospital indemnity insurance.
For ideas about how to include voluntary benefits in your employee benefits program, please contact us.
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