Voluntary Employee Benefits
Voluntary employee benefits allow employers to offer benefits that are attractive to employees without added cost to the company. Employees benefit because they have a variety of insurance options available in one place, often with lower premiums than individual policies they would have bought themselves.
What are voluntary employee benefits?
Voluntary employee benefits are coverages and products made available to employees for elective purchase. These programs have four key characteristics:
- 100% employee paid
- Offered through an employer
- Solicited and enrolled through a carrier or enrollment firm
- Paid through automatic payroll deductions
What are some common voluntary employee benefits?
- Permanent life insurance
- Disability income insurance
- Accidental death and dismemberment (AD&D)
- Supplemental health insurance
- Long–term care insurance
- Retiree medical insurance
- Dental/vision insurance
- Auto/homeowners insurance
- Prepaid legal services
- Pet health insurance
- Identity theft insurance
- Computer purchase programs
- Adoption assistance
What are some specific advantages to offering voluntary employee benefits?
- Increased expense control in the face of rising benefit costs
- Cost-effective way to supplement benefit cuts or reductions
- Important tools for attracting and retaining valued employees
- Help differentiate from competitors
- Opportunity to access a broader array of benefits
- Freedom to choose benefits that best suit their needs
- Affordable premiums (often deducted on a pretax basis)
- Portable coverage (employees can take the coverage with them if they change jobs or retire – as long as the premiums continue to get paid)
- Easier enrollment process
- Convenience of payroll deduction
- Often no medical exams
- Often less stringent requirements
What process should employers follow when expanding their non-traditional voluntary employee benefit packages?
- Examine current employee benefits to determine which benefits are popular or not.
- Talk to employees to determine which voluntary employee benefits they would prefer.
- Determine which employee benefits are offered by competitors, as current and prospective employees may use this information as a benchmark for evaluating their company.
- Determine the source(s) of benefits that offer the most value for the lowest cost. (This is very important to ensure success of a voluntary program because of employees’ perceived value.)
- Determine enrollment logistics, including methods of enrollment. One-on-one enrollment is the most effective means of communication and provides personalized attention.
- Determine service logistics, including support, new employees, terminated employees and re-enrollments.
- Initiate an employee communications campaign to educate employees on what voluntary plans are offered and the benefits of electing them. Showing support of the program motivates employees to take notice and see the value for themselves and their families.
- Consider offering employee benefits multiple times per year, not just during open enrollment. This allows employees to focus on one or two voluntary employee packages versus being overwhelmed with many packages all at once.
- Follow up to ensure employees are satisfied and that there are no issues with any of your voluntary employee benefits.
How are voluntary employee benefit outcomes measured?
To ensure that voluntary employee benefits programs are as competitive and effective as possible, employers should measure the success of the programs every 12 to 24 months using a few different metrics:
- Conduct surveys to test employee awareness of, understanding of and satisfaction with the voluntary employee benefits programs.
- Benchmark their portfolios of voluntary employee benefits against those offered by industry peers.
- Examine participation rates among employees to determine if they are at, above or below industry norms with regard to re-enrollment and persistency.
Voluntary benefits may not be the right solution for all employers or individuals. Please contact your Sandy Spring Insurance Corporation representative at 410.897.5800 for assistance in determining what type of voluntary employee benefit plan designs are right for you.
Wealth and Insurance products are not FDIC insured, not guaranteed, and may lose value.
Insurance provided by Sandy Spring Insurance, an affiliate of Sandy Spring Bank.
This material is provided solely for educational purposes and is not intended to constitute tax, legal or accounting advice, or a recommendation for any particular transaction.