Glossary of Human Resources Management and Employee Benefit Terms
Voluntary benefits are services and/or goods that an employer offers at a discounted group rate but are paid for (either fully or partially) by an employee through a payroll deduction. Voluntary benefits are supplemental to other traditional benefits (health insurance, retirement, etc.) and don’t have any direct costs to the employer.
Voluntary benefits may also be called employee-paid benefits or supplemental insurance.
Here are some examples of voluntary benefits within each of the seven general types:
Health: This category contains additional health insurance options, such as:
Critical illness insurance
Emergency hospital transportation insurance
Dental: Supplemental dental options help close the gap between covered procedures and uncovered ones, which may include:
Vision: This covers or discounts regular eye exams and other procedures, such as:
Laser eye surgery
Wellness and Lifestyle: This offers free or reduced services for the employee’s well-being. Examples include:
Financial: This supplemental benefit helps an employee to better manage their finances.
Financial planning services
Student loan repayment programs
Security: Options in this category cover an employee in case of death or identity theft.
Identity theft protection
Personal and Miscellaneous: These benefits can be anything else the employer feels will benefit the employee and increase retention rates.
Flexible work hours
Travel accident insurance
Voluntary benefits are important for employers to offer their employees because they are a win-win for everyone involved.
Close the gaps between typical insurance coverage and additional needs.
Relieve the rising cost of healthcare.
Decrease time away from work and increase employee productivity while at work.
Employers can reap many advantages of offering voluntary benefits:
They attract and keep loyal employees.
It helps your company compete against others, including larger corporations.
There are no or low direct costs.
Employees who take advantage of them are more productive and invested in their work.
When you present voluntary benefits to your employees, point out these advantages of receiving voluntary benefits:
Services are discounted due to special group rates.
Providers and their offerings are already vetted for validity, cost-effectiveness, and usefulness.
Coverage is flexible, tailored, and optimized per the employee’s needs and wants.
They help provide a financial safety net should traditional insurance be inadequate.
Some are deducted pre-tax.
Similarly to traditional benefits, there are a few limitations of voluntary benefits, namely:
Some voluntary benefit policies have no minimum staff employee requirements, but others require a minimum of 2-5 employees on staff.
Employees are only eligible to sign up for them through their employer.
Generally, part-time workers (and remote workers) are eligible, but there may be a minimum work hours requirement.
Independent contractors are usually ineligible.
There may be minimum or maximum age limits that apply.
Pre-existing conditions or other exclusions may limit the coverage available.
To determine which voluntary benefits to offer your employees, you must identify the company’s objectives, determine the needs of your employees, evaluate providers and their benefits, and review current (and evolving) legislative agendas surrounding the issues covered by both traditional and voluntary benefits.
Some questions that need to be asked when going through this process are:
What are HR’s current and future objectives?
How does our current benefits plan compare to those of our competitors?
What benefits are of value to our employee demographics (age, income level, location, etc.)?
Do we have any legal obligations that these benefits will help fulfill?
Will our employees buy into the reasons for and value of these benefits and take the time to sign up for and use them?
Is there any current or upcoming legislation that may affect traditional and/or voluntary benefits?
Doing all this may seem like a lot of work, but if you want the value and benefits both you and your employees can gain from having voluntary benefit options, then it’s worth the effort. However, insurance/benefits brokers and specific software meant for the administration of voluntary benefits can make these tasks much quicker and easier.