Voluntary Benefits Are a Valuable Tool
While loaded benefits packages help attract and retain employees, companies increasingly struggle to afford medical and prescription coverage. In the past decade, employment-based health insurance premiums have risen 120 percent, according to the National Coalition on Health Care. Health insurance expenses are the fastest growing cost component for employers, says the NCHC.
As business owners consider what benefits to offer their staff--and how much of the tab they can pick up--many overlook non-medical voluntary benefits. As the name suggests, such benefits are offered through the workplace to employees on a voluntary basis. The premiums are paid for completely by employees who can pick and choose benefits ranging from dental and critical illness packages to life and disability insurance.
Voluntary benefits are a win-win option for employers and employees, as the following chart indicates:
| Advantages of Voluntary Benefits |
| For Companies |
For Employees |
| Provides a comprehensive benefits package that helps keep staff happy. |
Flexible programs allow employees to craft a package based on needs and budget. |
| Helps level the benefits playing field with competitors and larger companies. |
Affordable group rates. |
| Minimal costs to offer. |
Offers security in uncertain economic times. |
| Ease of administration. |
More convenient than buying plans independently. |
Types of Voluntary Benefits
The most popular voluntary benefits include life, dental and disability income insurance.
Life insurance: In the "2009 MetLife Study of the American Dream," nearly one in five people surveyed indicated they are re-evaluating their life insurance needs. Companies may offer several options, including group or individual term life insurance, universal life insurance or whole life insurance.
Dental insurance: After medical and prescription drug insurance, dental coverage is one of the most sought after employee benefits. Yet many small to medium-sized businesses don't offer dental insurance. Companies can choose group or individual policies in addition to plans that pay benefits based on what's "reasonable and customary" in the dental field or based on a schedule of benefits stating exact dollar amounts for specified procedures.
Disability income insurance: This insurance provides income to employees if they suffer an injury or illness rendering them unable to work for a period of time. Like the previous two products, disability insurance can be sold as an individual or group-based policy. Employers can offer short-term or long-term policies: Short-term policies typically pay benefits for six months to two years, and long-term policies pay benefits from two years to age 65.
One of the newer voluntary benefits in the United States is critical illness insurance. Employees are paid benefits upon diagnosis of an illness named in the policy, such as cancer, heart attack, stroke and kidney failure. The insurance helps pay for the significant costs associated with illness that medical insurance may not cover, including co-payments, deductibles and travel expenses.
The Next Step
If your company is considering voluntary benefits, there are a handful of steps you should take. First, benchmark your company against others by examining what voluntary benefits are provided by competitors in your industry and geographic region. Next, survey your employees to gain a better understanding of their voluntary benefits' needs and the likelihood they will participate. Finally, find a knowledgeable benefits broker with experience in voluntary benefits.