The post below is a guest blog from Jay Lowe, who serves as Principal, Health & Welfare Consultant for CAI’s employee benefits partner, HCW Employee Benefit Services.
As the cost of providing benefits to employees continues to rise, an often underappreciated benefit employers can offer at little expense is voluntary benefits. These include such products as life insurance, dental insurance, critical illness insurance, vision benefit, disability income replacement coverage, and home owners/rental and auto insurance.
Voluntary benefits allow an employer to maintain a robust offering of services that enhances the overall package, while letting workers handle the total cost of benefits through their payroll deductions.
With voluntary benefits, employers can set themselves apart from competitors that offer only the traditional lines of medical coverage. Since many workers have indicated through several surveys (including some cited below) that they want a suite of benefits, voluntary benefits should be a popular item to implement. This can ease employees’ worries relating to future costs that may be incurred in these areas and shows them the value of their employment, thus serving as a strong retention tool.
The annual “Study of Employee Benefits Trends” white paper released by MetLife this year suggests that many employers nonetheless are failing to recognize the appeal of voluntary benefits and take advantage of them. With the exception of 20 percent who offered life insurance, at most only 10 percent of businesses with up to 499 employees surveyed offered any other voluntary benefits. At the same time, at least 26 percent of Baby Boomers and 38 percent of younger workers (Gen X and Y) said they were interested in each of those products even though they had to pay 100 percent of the cost.
The white paper reported that 38 percent of workers surveyed cited a choice of voluntary benefits as a factor that drives loyalty to their company. More than 50 percent of both younger workers and Baby Boomers said they would rather pay for benefits than lose them. The white paper noted that “Voluntary benefits … can serve to fill gaps and supplement employer-paid programs to provide a more holistic benefits offering.”
Another recent survey by Guardian Research discovered that participation rates in voluntary benefits have been climbing and will continue to increase, especially for non-dental and non-vision offerings. The study said that addressing the lack of perceived need for voluntary benefits has been and will continue to be the biggest opportunity moving forward for employers in this area.
These findings suggest adding voluntary benefits can be part of an effective employee recruitment strategy for employers, but several considerations need to occur for successful implementation. One is the wide variety of products available. Beside the voluntary benefits listed in the white paper, employers can provide additional lines such as supplemental life and dependent life, critical illness coverage, cancer coverage and hospitalization. Should any or all of these benefits be included in your package?
Another concern is making sure employees understand what the benefits involve. Employees frequently overlook voluntary benefit offerings during orientation and open enrollment because they are focusing on other tasks they consider more important, such as adjustments to their existing plans. If employees concentrate on other items than voluntary benefits when they are presented, chances are strong they will avoid taking full advantage of the products and programs. The time and money spent on presenting such benefits to employees will have been a waste for the employer.
When selected and presented properly, voluntary benefits are a great way for employers to enhance their traditional lines of coverage at little or no cost to the company’s bottom line. There are convenient, web-based enrollment tools which provide a simple, quicker enrollment and reduce costs and free up time to focus on running the business in the process. The process serves as an effective recruitment and retention tool in attracting and maintaining top talent in the organization.
From an employee perspective, the ease of purchasing these types of products via payroll deduction can be a great benefit. The simplicity of accessing this protection at the workplace avoids wasted time by the employee looking for this coverage during their free time.
Employers should be cautious and limit the lines of coverage when initially launching these benefits. Gauge employees’ interest in the proposed products before deciding what coverage to offer. Employees who believe programs are of limited value in what they can buy likely will not participate in them. Identify employee needs and interests, and match product options to them to produce better results. Involvement in voluntary benefits is particularly crucial for smaller employers, as minimum participation percentages or signup of enrollees may be required in order for the plan to take effect.
It’s important to consider your communication methods around these benefits as well. For effective communication of voluntary benefits, provide information beyond orientation and open enrollment sessions. Send out emails, put up flyers, devote special meetings to provide an overview and answer questions. Talk about the voluntary benefits year round. Help employees fully understand and appreciate what voluntary benefits do for them and how they are relevant.
One final key consideration is making sure that any voluntary benefit offering supports and integrates with the core health and welfare strategy. This is another area where HCW consultants assist in ensuring alignment with your organization’s entire benefit strategy.