Voluntary benefits are key to offering valuable employee benefits packages and attracting and retaining talent.
Voluntary Benefits can best be described as employee-paid, optional benefit coverages that are used to supplement traditional “core” benefits (medical, dental, life, disability). They are commonly referred to as worksite benefits and continue to be favored among employees across all industry segments and are known for aiding employers in employee attraction and retention efforts.
What continues to be top of mind for most employers these days? Mitigating costs in their employee benefit plans while attracting and retaining top talent – no news there, right? Interestingly enough, one of the most helpful tools in reaching these goals isn’t so new either: voluntary benefits, aka, worksite benefits.
Voluntary benefits can be intimidating. And with good reason. It takes a benefits expert to thoroughly and adequately evaluate the market so employers can focus on what’s the best fit for their employees – the right insurance carriers, products and contracts. But when managed correctly, voluntary benefits can be one of the more valuable benefits an employer can offer its employees. Whether offering true individual policies or those on a group chassis or structure, the opportunities are there - it’s just a matter of knowing where to start!
The Whys, Whats and Hows of Voluntary Benefits
One reason to offer voluntary benefits is that the employer can save direct costs.
When an employer provides traditional, employer-paid group coverage (Basic Life, Accidental Death & Dismemberment, etc.), and allows that carrier to also offer one or more of their voluntary coverages, there is typically a discount to the group coverages.
In addition, voluntary benefits help attract and retain top talent. When employees have access to benefits that are meaningful to them personally, they’re known to be more loyal to their employers. What types of coverages is meaningful to most employees? This can vary by industry and is part of the discovery phase prior to implementation. However, some products can apply across most industries. So – what are they?
Critical Illness (CI) and Accident (ACC) coverage are two of the more popular voluntary benefits. Aside from being offered by many insurance carriers, and offered as individual and group options, they are also affordable and quite flexible in their coverage options. Critical Illness covers various critical illnesses – and policy amounts fluctuate by payout amounts per illness and timing of payouts (at diagnosis, hospitalization, etc.). Accident coverage covers injuries associated with various accidents or medical conditions. It can also be tailored to the meet specific needs of the enrollee.
Another key component to the popularity of voluntary benefits, particularly these two coverages, is that they assist members with out-of-pocket medical expenses that their medical plans may not cover due to increased deductibles or out-of-pocket maximums.
Along with Critical Illness and Accident coverage, Individual Disability (IDI) and Long Term Care (LTC) draw consistent interest as well – but for varying niches rather than the broad spread of CI and ACC. IDI is more appropriate for those employers with higher-compensated employees that may easily hit the group Long Term Disability (LTD) maximum. By providing an IDI option, employers can reduce the group LTD maximum (which will reduce their premiums) and carve out the higher-compensated employees to apply IDI at the upper end of their coverage. This provides a tax-free benefit to those employees while also saving direct costs for the group LTD. And while LTC exited the market mostly over the last decade – it has been making a comeback! Minimal stand-alone LTC options remain and can be somewhat costly, which reduces the broader appeal. However, newer products continue to emerge that offer permanent life insurance with a LTC rider. This provides a savings vehicle for the life coverage as well as the option to use the payout for LTC expenses, should the need arise. There are many variables and options an employer must consider. How does this all come together for the employee?
Once employers decide which voluntary benefits offerings best suit their employees, the enrollment process, truly the linchpin to it all, is executed. Employers continue to improve their benefits administration (BenAdmin) and Human Resources Information System (HRIS). While much of this demand was brought on by ACA regulations, some benefits have come from this. Employers are more able to understand their employee populations, allowing them to communicate with them electronically for emails, surveys, online enrollments and more.
A benefits consultant helps employers plan the best strategy for the enrollment process. It is important to educate employees about their benefits options. Many voluntary benefits providers have representatives who can discuss the coverage options with employees.
Employers may choose to enroll their voluntary benefits options via self-serve platforms, where employees enroll online and walk themselves through the decision-making process. This option is common when voluntary benefits are enrolled during a traditional, annual open enrollment period. A growing number of employers are opting for a targeted, special enrollment period where voluntary benefits are the star of the show.
Small Group or One-On-One Meetings
The enrollment firm or one-on-setting remains quite popular. While this option requires more planning, education, and communication, meeting one-on-one or in small group, settings continues to be the most helpful in terms of employees electing the most meaningful voluntary benefits options. In our tech-heavy world where many things can be delivered with no human contact, this personal touch is valued by many employers and employees.
Contact your OneDigital consultant today to learn more about incorporating voluntary benefits into your employee benefits package. We guide our clients with custom-fit benefits solutions and employee education.