Voluntary benefits are becoming increasingly popular with employers looking to sweeten the pot for attracting or keeping good employees — without running up costs to the bottom line.
Nearly half of the respondents in a 2013 survey said they expected voluntary benefits to continue to become more important over the next five years, according Towers Watson, a global professional services company that conducted the survey. The survey further found that the importance of voluntary services as part of a company's total benefits package is expected to grow 27% in the next five years.
Voluntary benefits are just what they sound like: voluntary on the part of the employee. Unlike normal employment benefits — such as health insurance and retirement — that are subsidized in part by the employer, voluntary benefits are offered through the employer but completely paid by the employee. They typically include such products as accident insurance, life insurance, disability insurance, legal services, financial counseling, ID theft protection and even pet coverage.
Here are six things businesses should consider when offering voluntary benefits.
1) Shop around. Traditionally, voluntary benefits were provided through a company's current benefits carrier. But more carriers are offering a better array of voluntary benefits, so it pays to go beyond your current carrier to research the market.
2) Use a broker. Businesses do not want to deal directly with multiple carriers, such as Aflac, Colonial, Allstate and so on. Like other forms of insurance, they can use a broker to do all of the specifics. Individual carriers push their products, but brokers have the freedom to educate a business and find the best options.
3) Require an onsite broker rep. When using a broker, be sure that the firm has a worksite department and does not just send a representative from a carrier to your business. The broker should have someone personally involved, in a sense, representing you, who can find the best deal among many carriers.
4) Determine the enrollment process. Establish how the enrollment process will work for employees. Will there be group sessions, one-on-one meetings, webinars? Who will teach the employees about the benefits? Any benefit package is only as strong as employees' knowledge of it.
5) Understand the underwriting. Know which carriers offer guaranteed issue and waive pre-existing condition limitations on the entire product mix. Will a new carrier be willing to accept the time served on the current carrier's plan? This is particularly important for critical illnesses, Short-term disability, and hospital plans.
6) Consider the product mix. This can be particularly tricky as workforces now have significant generational differences, with employees from the Baby Boom generation nearing 70 years old, young employees from Y Generation just starting out and Gen X sandwiched between. Finding the right mix for a diverse workforce becomes essential in the process. A good broker can help you find the right mix for your company.
Employees who are satisfied with their benefits are much more likely to stay with a company. Voluntary benefits are a way for companies to strengthen retention of their best employees.