Why Voluntary Benefits Are on the Rise
The economy is in recovery, but it’s a slow climb up the mountain. Company belts haven’t been loosened and with the overall impact of healthcare reform still uncertain, it may be some time before they are. According to HR Daily Report, this is why more employers are looking at voluntary benefits as a lower-cost incentive to attract new hires:
Offering employees everything from auto and home insurance to legal plans or even pet insurance is a growing trend among employers looking to stay competitive. That’s the assertion at a recent presentation at the 2011 Health Care Benefits NY conference, which also listed the most popular group VBs, now and in the future.
- life insurance
- disability (long- and short-term) plans, and
- vision plans.
- long-term care
- legal plans, and
- auto and home insurance.
There’s one secret to success, according to experts on voluntary benefits. And it has nothing to do with what you’re offering but rather how you’re offering it: Make sure your company sets up a payroll deduction for employees to participate.
That accomplishes two goals. It:
- helps employees sock away the money to cover the costs of premiums, etc., and
- further reinforces with employees that your company endorses that specific benefits plan.
But why are voluntary benefits, such as life insurance, popular additions to benefits packages when employees are paying for these benefits themselves? For one, organizations can get group rates, allowing employees the opportunity to get these benefits cheaper than if they went shopping on their own. Disability insurance and life insurance are voluntary benefits that companies may be offering already. However, companies are now taking a closer look at enriching these packages. Entreprenuer.com explains that “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 types 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,” points out Bernard DiFiore, president of BenefitMall, a Texas-based benefits wholesaler”.
How much savings for employees are we talking about? A few business professionals, including DiFiore, John Roberts, President and CEO of Assurant Employee Benefits, and Steven Roper, owner of Roper Insurance & Financial Services, explain that along with the popular disability and life insurance benefits, other voluntary options can provide “bang for the employee buck”. Here’s how:
- Because it provides protection against lost income, disability insurance (short- and long-term) is perhaps the most popular voluntary benefit nowadays, Roberts says. “Instead of paying $100 a month for a lot of piece parts, like accident and hospital insurance, employees can pay, say, $30 a month for group disability and another $20 a month for group life insurance and still have $50 in their pockets,” Stocks says.
- The financial security afforded by life insurance makes it an especially popular voluntary benefit in uncertain economic times. While term life is still most prevalent, a “flight to quality” among employers and employees is making permanent life insurance (such as universal life) more popular, Roper says.
- Voluntary dental insurance also holds great appeal for employees because, Roberts says, “you can design it so it’s not very expensive.”
- Relatively new among voluntary benefits, supplemental limited-benefit plans that provide a set dollar amount per day (typically $500 or $1,000) for hospital stays are gaining popularity, DiFiore says, as are gap insurance policies that pay a certain amount up to a deductible.
- More targeted in their coverage but also appealing, especially to small businesses with high-deductible plans, are supplemental accident insurance and critical illness insurance, says Melanie Barnard, an employee benefits consultant with GCG Financial in Greenwood Village, Colo.
Voluntary benefits can help keep your employees happy with little to no effect on your budget. If your organization already includes these types of benefits, be sure that they are being highlighted as part of the recruitment strategy. Just because the associated costs ultimately come out of the employee’s pocket doesn’t mean that they aren’t as valued as other benefits. Anyone recruiting in today’s market understands the struggle to attract and retain proper talent. Voluntary or not, you should utilize any perks or benefits your organization provides to set you apart from the competition.