Voluntary Benefits FAQs: How These Products Work and Why They Boost Employee Wellbeing

Voluntary benefits can be leveraged to improve employee wellbeing at no direct cost to the employer. Here’s what you need to know.

You’ve probably heard of voluntary benefits before, but you may not know just how consequential and impactful they can be on the physical, mental, and financial health of your workforce. Here are some common questions and answers for those who are looking to learn more about this growing trend in the employee benefit marketplace:

Q: What are voluntary health benefits?

Voluntary benefits, worksite benefits, and supplemental health benefits are all different terms that describe similar products. These products are typically offered by employers as optional benefits for employees, who can decide to opt-in. Participating employees generally pay for voluntary benefits via payroll deduction.

Generally speaking, voluntary benefits provide extra coverage for treatments and services that are either not covered or not adequately covered by standard health insurance plans. One of the most common applications of voluntary health benefits is the supplementary coverage for the treatment of critical illnesses, such as cancer, strokes, or organ failure. It is also possible to provide voluntary benefits that cover less severe health issues, such as torn ACLs, broken bones, or other accident-related injuries.

These benefits provide financial support to participating plan members by dispensing lump sum payments for medical expenses and, sometimes, for household costs and other related expenses that are incurred from covered health conditions. Plans vary in coverage, with some offering set payout amounts for treatments and others covering a percentage of medical costs incurred. Either way, voluntary benefits act to reduce medical bills and protect participating employees from large, unexpected expenses. Voluntary benefits are purchased separately from standard health insurance coverage, and educational resources are often available to help employees determine which products would best complement the coverage of their existing health plan.

Q: How do premium payments for voluntary benefits work? What are the costs to employers and employees?

Employers typically incur no direct costs when offering voluntary benefits, as participating employees fully pay for their coverage on an individual basis. Costs to participating employees can vary substantially depending on the type of coverage being purchased, the details of the policy in question, and whether they are purchasing coverage for dependents as well as for themselves. Some voluntary products will also tailor pricing to individuals based on factors such as age, medical history, and potentially other relevant information, such as tobacco use.

Voluntary benefits act as a shield against unexpected medical expenses and the mental, physical, and financial stresses associated with them. Because providing voluntary benefits is usually cost-free for employers, introducing these offerings is a low-barrier, high-ROI way to boost overall workforce wellness.

Q: How can plan members sign up to participate in voluntary benefits? Can individual employees and/or dependents pick and choose what they want to participate in?

Typically, employers who offer voluntary benefits simply add these products as optional, supplemental offerings within their existing benefits administration portal. Then, during open enrollment, individual employees can pick and choose which voluntary offerings they would like to purchase for themselves and their dependents.

Q: How do claims and payouts work?

Unlike health insurance, which pays healthcare providers, claims payments for voluntary Accident, Critical Illness, and Hospital Indemnity policies are sent directly to plan members via direct deposit. To submit a claim for processing, covered plan members must submit an Explanation of Benefits (EOB) to the carrier/provider. Once the EOB is processed and the claim approved, the carrier directly compensates the plan member, who may spend the money however they see fit.

Q: Is the implementation of voluntary benefits different for fully insured vs. self-funded plans?

In a word, no. Because voluntary benefits act as standalone offerings that are not directly tied to standard health insurance plans, their introduction and implementation does not vary depending on a plan’s funding model. As with standard health insurance plans, brokers and consultants are typically able to assist their clients with the implementation process. Once voluntary benefit offerings are in place, eligible employees and dependents will have the option to select them during their usual open enrollment process.

Q: Who handles plan management and administrative tasks?

With the guidance of an employee benefits consultant, employers can choose the carriers, plans and prices they want to make available to their employees. Once the plans are in place, employers will handle payroll deductions and premium payments to insurance carriers on the employee’s behalf. Voluntary benefit claims are submitted to carriers by employees themselves. Should there be issues, the employer can contact their employee benefits consultant to assist.

Q: How widespread are voluntary benefits among employers today?

While carriers used to only offer voluntary benefits to larger employers with hundreds of eligible members, access has become much more widespread in recent years. At present, many carriers are willing to offer voluntary benefits for as few as three enrolled employees.

However, adoption of voluntary benefits has been slow to catch up with their newfound availability to smaller employees, and they are still relatively uncommon among smaller groups. This presents a window of opportunity for smaller employers to get a leg up on competitors and implement voluntary benefits today.

Q: From a business perspective, why would an employer want to offer voluntary benefits? How does this type of offering impact employee wellbeing?

Voluntary benefits act as a shield against unexpected medical expenses and the mental, physical, and financial stresses associated with them. This makes them an incredibly effective way to promote employee wellbeing and provide your plan members and their dependents with an optional way to protect themselves from financial hardship.

As mentioned above, claim payments from voluntary benefit policies are made directly to policyholders, which makes the impact of these policies especially salient for participating employees. Because providing voluntary benefits is usually cost-free for employers, introducing these offerings is a low-barrier, high-ROI way to boost overall workforce wellness. More robust health insurance coverage is strongly correlated with better health outcomes, which are in turn associated with higher productivity, increased morale, and superior talent retention.

As you review your benefit offerings this year and brainstorm ways that they can be optimized and improved, it may be worth contacting your broker and learning about what types of voluntary benefits are offered by your carrier and how your organization could implement them. With carriers constantly entering new markets, developing new products, and expanding access to smaller and smaller groups, it is likelier than ever that you have the ability to add this free wellbeing booster to your plan at essentially no cost.

To learn more about voluntary benefits and how they can help your employees, watch our on-demand webinar From Awareness to Action: Leveraging DEI&B to Enhance Mental Health and Financial Wellness.