Voluntary Benefits: A Winning Strategy for Employers and Employees

November 15, 2017

Employee benefits are an integral part of an employer’s compensation package. They can help attract and retain talent, encourage longevity and provide a substantial financial backbone for employees. As benefits products become more standardized, employers are looking for ways to make themselves stand out from the pack in order to compete for top talent. Voluntary benefits are a great way to help accomplish this goal.

What are voluntary benefits?
Voluntary benefits are essentially add-on products that are provided within a standard benefits package. For a business already offering medical, dental and vision coverage, voluntary benefits can provide financial help in times of crisis or in case of an accident or illness, including insurance for pets. Voluntary benefits can be used to help pay deductibles, particularly if an employee is enrolled in a high deductible health plan (HDHP). Voluntary benefits typically include: 

  • Life insurance
  • Accident coverage
  • Critical illness policies
  • Hospital indemnity plans
  • Legal plans
  • Discounted auto/home policies
  • Pet Insurance

The National Association of Health Underwriters (NAHU) provides some clarity in choosing which policies to add to your benefits package. According to NAHU, employers should make sure that the voluntary products offered do not duplicate coverage provided elsewhere in the benefits package. Additionally, employers should identify what is important to their employees. The ultimate success of any voluntary benefits offering will be predicated on two things: 1) a commitment to the success of the enrollment and 2) the employees’ sense that their needs are paramount to the offering.

The benefit of voluntary benefits
From an employer perspective, the best financial advantage these voluntary benefits offer is the fact that they are 100% employee paid. For an employee, the post-tax deduction taken to pay for the benefits premium means that the payout derived from policies such as accident coverage or critical illness benefits comes to the employee tax free.

This cost-savings can be a significant boost to an employee who is dealing with a serious medical issue. Additionally, ancillary benefits can provide employees with help in critical areas of their lives. For example: 

  • Offering legal plans as a benefit allows employees to take care of creating their will and other vital documents that they may have delayed due to the cost of having them prepared.
  • Auto and home policies offered at a discount through an employer can be a great value to an employee whose policy costs are high. These policies can relieve financial pressure if and when a major loss to their home or auto occurs. 
  • Hospital indemnity plans are designed to pay the employee while in the hospital.  Unlike health insurance, which pays the hospital directly, this type of benefit makes payment directly to the employee who can then choose how to spend the money.

Offering voluntary benefits can give employees peace of mind, making them happier overall and allowing them to focus on their work.

Next Steps
Employers who have an interest in adding voluntary benefits to their benefits package should start by getting a sense of their employees’ needs. For instance, if your employees are generally young and healthy, critical illness coverage may not be as attractive as, say, pet insurance. However, if your employees tend to have families and a mortgage, a legal plan and discounted homeowners’ insurance could be helpful to them. Your HR services provider can work with you to determine which voluntary products are right for your organization. 

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

This post may contain hyperlinks to websites operated by parties other than TriNet. Such hyperlinks are provided for reference only. TriNet does not control such web sites and is not responsible for their content. Inclusion of such hyperlinks on TriNet.com does not necessarily imply any endorsement of the material on such websites or association with their operators.

By Janice Scherwitz

Janice Scherwitz is a benefits compliance analyst at TriNet.

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