Companies that want to add value to their benefits offering without spending a lot of money are using voluntary benefits to fill the gaps. The idea behind voluntary benefits is that employees pick and choose from a variety of additional benefits packages, and cover the cost themselves.
It’s a growing area of the benefits sector for a number of reasons, said Amy Hollis, national leader of voluntary benefits for Willis Towers Watson. One key driver is the desire to attract millennial workers.
“Companies need to add value beyond salary and traditional benefits,” she said.
That’s lead to a variety of new voluntary benefits options, including identity theft protection, health club memberships and student loan repayment programs, to compliment the more traditional vision and dental insurance, critical care coverage and life insurance that appeal to older generations.
Companies are also using these plans to help all employees balance the risk of rising health care costs, said Nelson Griswold, vice president of the Voluntary Benefits Association and president of Bottom Line Solutions in Nashville, Tennessee.
“Employees are facing high out-of-pocket costs that can cause them to make poor health care decisions,” he said. They may delay early interventions to avoid paying deductibles only to end up in the emergency room, requiring more extensive care and additional time off work. Voluntary benefits give employees a safety net to cover these costs and prevent small health care concerns from turning into crises
Traditionally, employees have covered the cost of these benefits themselves. Though recently, some companies are paying for some of these offerings as a way to balance their health insurance program costs. For example, a company may choose an insurance plan that has a higher deductible but lower premium, then add critical illness or other medical plans to fill the financial gap, Griswold said. “They are creating an umbrella of coverage options to balance the odds for their employees.”
Hollis has also seen many tech companies pick up the tab for identify theft benefits, as they view this as a risk to themselves as well as their people. “It’s as much about protecting the brand and the employee,” she said.
Ask What They Need
Voluntary benefits options can be appealing for companies that want to cater to the needs of their employees, however they shouldn’t go overboard, said Rob Shestack, chairman and CEO of the Voluntary Benefits Association in Philadelphia.
“You have to look at the demographics of your employee population, including age, gender and salary,” he said. “If the average employee is earning less than $25,000, their benefits choices will be very different from those earning six-figures.”
Many companies want to offer multiple package options to accommodate these different demographics, though he urges them to limit choices to a few targeted plans. Otherwise they risk making decisions overwhelming for users.
“Assemble a top list of benefits, than narrow it down and get employee feedback,” he advised. Companies can also look to carriers for help in manging enrollment and participation. Most carriers in this $7 billion industry are expanding their online capabilities and streamlining enrollment to accommodate product offerings from multiple carriers.
Once a program is selected, benefits managers need to actively promote it and provide employees with the training and support tools to make the best choices. Shestack said an Aflac study showed Americans lose up to $750 a year by making poor benefits choices, because they don’t spend enough time analyzing their options.
“It is not enough to offer passive support programs,” he said. He argued that every employee should have to go through a short training program on how to make the right benefits decisions. “It may not cause everyone to make different choices, but for the people who do, it can be a real financial benefit.”