BenefitsPro: How Voluntary Benefits Help Attract—and Retain—Employees In A Hot Job Market
According to a recent paper, more than one-third of U.S. workers have changed employers or lost jobs since February of last year. Employers across the country are struggling to fill open positions and are often finding that benefits—not compensation—is the deciding factor for many candidates. Differentiation is key in an increasingly competitive landscape, and a flexible and a competitive benefits package is one way employers can stand out.
Today’s employees want flexibility, financial security and protection from unexpected health care bills. The pandemic focused employee attention on the gaps in their coverage that left them exposed financially and medically. Now, as they prepare to return to their jobs (or the workforce in general), many are asking the age-old question: “What’s in it for me?”
The solution for many employers—particularly those with smaller benefits budgets—is voluntary benefits. Not only do they offer employees flexibility in their choice of benefits—allowing them to tailor a package that meets their needs—but, in many cases, flexibility in how the payout from those benefits is used.
Employers are certainly recognizing the value of voluntary offerings—according to a recent Willis Towers Watson survey, 94% of employers cite voluntary benefits as a key piece of their employer value proposition.
The growing demand for voluntary benefits
Voluntary benefits are always evolving—new offerings become available, existing programs are tweaked (contagious disease riders, anyone?) and employee preferences change. If employers haven’t assessed voluntary benefits recently, it’s worth revisiting the options currently available, such as:
Hospital indemnity – Because this insurance pays a lump sum directly to the policyholder, employees can use the money to pay for whatever they want —whether medical bills or groceries, rent or childcare. Offering a benefit that puts money directly in employees’ pockets and gives employees the flexibility to spend that money as needed will be well received.
Critical illness – This type of policy now often includes infectious disease riders—of particular interest to a workforce that’s weathered COVID-19. As with hospital indemnity, these policies pay out cash, which means employees control how the money is used to improve their lives or relieve their finances in the most meaningful way.
Supplemental disability and life plans – Because these benefits provide support for employees’ families during especially challenging times, offering this coverage can show how employees as three-dimensional people with families who also deserve support outside of work.
As employees look for ways to boost their coverage or fill in gaps, they will appreciate employers who provide a variety of benefits they can select based on their personal situations. Giving people this power over health care and financial decision-making is essential to improving employee satisfaction.
Support for health and financial well-being
Voluntary benefits can provide additional levels of financial protection against unexpected costs if employees become ill or are injured and cannot work. Some (such as buy-up disability) provide a higher level of replacement income, others (such as critical illness or hospital indemnity) provide an additional source of income that can be used to cover medical costs—or any other type of expenses. And still others provide an increased benefit should the worst happen.
Better yet, voluntary benefits are typically more affordable for employees than similar coverage purchased on an individual basis, since employers get the advantage of a group rate. In fact, in a Prudential survey, 60% of employees said employer-provided voluntary benefits typically cost less than those purchased elsewhere.
Voluntary benefits give employers flexibility
While voluntary benefits may have garnered more attention during the pandemic, they are much more than a temporary security blanket. Voluntary benefits enable employers to supplement their benefit offerings to meet the needs of a diverse workforce at little to no cost.
Employers can treat many voluntary offerings as ERISA plans (enabling them to cover all or part of the applicable premiums) or maintain an arms-length relationship limited to collecting premiums and relaying them to the carrier. And, depending on corporate needs and carrier willingness, employers may choose to:
- Confine voluntary benefits to the annual open enrollment in order to consolidate eligibility, payroll and enrollment files.
- Offer mid-year enrollments, which provide employees with more flexibility to elect coverage on an as-needed basis, or
- Allow employees to enroll any time of the year, as the carrier “owns” eligibility and enrollment administration.
When communicating about voluntary benefits, employers must tread carefully. While it’s important to communicate the availability and value of voluntary offerings, employers must avoid the appearance of promoting or sponsoring these programs, lest they inadvertently subject them to ERISA regulations and requirements. Using the carrier, broker or a third-party enroller can ensure employees have the information they need to make an informed decision.
Voluntary benefits provide yet another way for employees to personalize their coverage. Employee needs will continue to change in response to both personal life events—marriage or divorce, having children, relocating—and other major health events. With voluntary benefits, employees gain the peace of mind that they can expand their coverage when necessary. This extra layer of protection and confidence is increasingly appealing in today’s uncertain world and can make a difference in improving employee satisfaction and retention.
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(Kim Buckey, Vice President, Client Services, DirectPath)