Remember Tony the Tiger? He has been promoting the same cereal for decades, and both he and Frosted Flakes are still around.
Adults and kids love the flavor—and the sugar. Why does this phenomenon stay popular year after year? Because it’s a winning combination, and chances are, neither Tony nor the cereal are going away anytime soon.
Voluntary benefits likely won’t be going away anytime soon either, especially with HHS and health reform presenting a challenging healthcare environment. Voluntary benefits are popular because they work, and people like them. The difference is that there’s no sugar rush like you get with coated cereal flakes. According to Broad Reach Benefits in New Jersey, here are some advantages to offering voluntary benefits:
- No employer costs. Voluntary benefits are a great way to provide employees with the benefits they want and desire with little or no cost to the company. Any additional administrative costs can be offset by the payroll tax savings the employer gains from Section 125.
- Highly desired benefits. How many times have employees or prospective employees asked about benefits like dental, disability or additional life coverage?
- Employee retention/attraction. Companies with strong employee benefits packages have lower employee turnover and find it easier to attract prospects looking for employment. This is critical when the employment pool is reduced due to high levels of employment.
- Group rates. By utilizing the purchasing power of your group, the employees get access to benefits at low group rates.
- Favorable underwriting. Disability coverage and life insurance are extremely difficult to find on an individual basis if the insured has a less-than-favorable medical history. These products have simplified underwriting requirements, or in many cases are guaranteed issue (no health questions!).
- No secondary market. Some programs (ie. indemnity dental plans) are only available through employer-sponsored plans. Employees can’t simply go home and contact their local insurance agent to purchase coverage.
- Promotes goodwill. Employees love the chance to choose from options that fit their individual healthcare situation.
In the past, employers have offered voluntary worksite benefits to boost morale, attract strong candidates and retain employees, according to LIMRA, the worldwide association of insurance and financial services companies. Now, due to growing economic pressures, nearly 80 percent of employers say they are interested in using voluntary worksite benefits because these plans carry no direct costs to the business.
Employers’ costs are not the only motivating factor for offering voluntary benefits. Two-thirds of employers said they offer voluntary benefits because it’s more affordable for their employees than if they purchased coverage on their own, and it provides them with a wider array of benefits.
Many small business owners and their employees are looking for more flexible benefits options as they seek ways to manage rising healthcare expenses. Making voluntary insurance policies available to employees has no direct cost to the employer and may reduce corporate taxes by cutting FICA tax contributions. Adding voluntary plans to a company’s benefits offerings can help to satisfy the biggest benefit challenge for six out of 10 small businesses—offering robust benefits while staying within budget constraints.
Voluntary benefits, including policies for accident, cancer/specified-disease, dental, life, short-term disability and vision, help employees cope with out-of-pocket costs associated with serious accidents or illnesses—costs major medical insurance is not designed to cover.
In the event of a serious accident or illness, policyholders receive cash benefits that can be used to help pay for daily living expenses, such as rent, gas, groceries, travel expenses and babysitting, as well as unreimbursed medical expenses.
Voluntary benefits can not only enhance a company’s benefits package, allowing it to better compete with larger organizations’ benefits programs, but can also demonstrate to employees that they matter. With no direct cost to the company, adding voluntary benefits as an option for employees may go a long way in helping to avoid the high price tag of turnover.
Whether your offerings are insurance, discount, indemnity or self-funded, voluntary benefits are the way to go to increase employee retention, attract new employees, save money and keep your company healthier for both the short and long term. Business owners and smart HR directors know that the best way to improve company performance is to keep your primary assets (your employees) in good shape. iBi