Employers who understand voluntary benefits realize these are more than a sprinkling of niceties in the benefit package. Employees are concerned about these benefits and may often choose to work for the employer who offers more. Thus, small businesses can use voluntary benefits as an inducement to draw talent as well as avoid losing talent to competitors who offer a stronger portfolio of benefits.
In these difficult economic times, many employers view these ancillary benefits as things to cut first to stem a diminishing cash flow. However, smart employers are using voluntary benefits to enhance their benefit package while keeping the costs of employee benefits stable.
Employers are doing this in several ways.
- Adding voluntary benefits to complement existing employer-paid benefits. For example, an employer can add on voluntary benefits to things like life-insurance and long-or-short term disability benefits. This takes the burden of paying for the benefit off the employer’s shoulders and allows employees the opportunity to buy coverage for themselves and their dependents, suited to the employee’s own needs.
- Restructuring an employer-paid benefit to include an employee buy option. An employer may pay for the base-level benefit and the employee could have the option to upgrade to a richer benefit and pay the difference.
- Replacing an employer-paid benefit with a voluntary one. Instead of the employer paying for the benefit, such as disability, life, or dental insurance, the employee bears the cost.
- Offering discount cards through affinity partnerships allow employees to enjoy discounts on things like auto or home insurance at no direct cost to the employer.
The most frequent types of offerings in the voluntary insurance market are short-term and long-term disability, supplemental life, critical illness insurance such as cancer or heart policies, accident, and hospital indemnity policies. Other types of voluntary benefits might include things like a prescription drug card, pre-paid legal, dental, or discount offerings from various kinds from many companies.
Several advantages for both employer and employee are derived from the use of voluntary benefits.
“Not only does offering voluntary benefits cost small employers virtually nothing and help level the benefits playing field with larger companies, it also affords employees access to various type of insurance coverage, typically with looser underwriting requirements and at group rates that are ‘lower than if they went out and got coverage on their own,’” says Bernard DiFiore, President of BenefitMall, a Texas-based benefits wholesaler.
One key to helping employees make the adjustment from paid to voluntary benefits is to find a vendor that can ensure that products are competitive priced, administratively simple, and easily explained to employees. Another key is flexibility. The “one size fits all” package doesn’t work anymore. The needs of a 25-year old single individual are not the same as a 40-year-old married person. Voluntary benefits allow each to decide what is best and affordable for them.
Voluntary benefits will undoubtedly play a crucial role in the workplace of the future, where employees will be able to choose from an extended list of benefits for which they will pay for wholly or in part.