Voluntary benefits have become an essential way to create or enhance your current employee benefits package. They are a unique and important asset to your company.
What are Voluntary Benefits?
Voluntary benefits are employee benefits that employees can purchase from their employer. Notably, this is usually done at little or no cost to the employer. Offering these benefits through the employer is a win-win that provides opportunities for tax benefits to employees, reduced premiums through group rates and potential tax benefits to the employer.
Voluntary benefits fill gaps that primary health insurance leave open. This gap is growing every year with the high deductibles of major medical plans. Unanticipated accidents or illness can leave employees with tremendous financial burdens, and voluntary benefits can be the difference that employees will feel grateful to have.
Voluntary Benefits are the Competitive Advantage in Talent Management
Attractive benefits packages that give employees choices are an essential part of an effective recruitment strategy. In a recent survey from Cambridge Investment Research, Inc., 62% of all employees under 50 years old will not consider taking a job that does not offer voluntary benefits. Offering quality voluntary benefits options can boost your ability to recruit and retain top talent. This is especially critical in our current job market environment with unemployment rates being low and a growing percentage of the workforce that is part time. Recent research indicates about 25% of U.S. employees are employed part time, and this number is expected to increase to 50% in the next three to five years. Many of these workers lack employee benefits. Voluntary benefits allow employers to make benefits available to both W-2 and 1099 (independent contractor) employees.
Voluntary benefits play an important role in employee morale and satisfaction at work. This impacts retention. Reducing turnover saves your business the significant costs of recruiting, hiring and training replacement staff.
Voluntary Benefits Have Positive Impact on Productivity
By offering voluntary benefits, employers are able to make many preventive services available to keep employees healthy and productive at work. Healthier employees have been shown to decrease the overall health costs for your company. For example, when employees don’t have dental insurance, they are 2.5 times more likely to not visit the dentist. Medical studies indicate that poor dental hygiene is linked to many chronic diseases such as cardiovascular disease, diabetes and Alzheimer’s disease.
Look for voluntary benefits options that allow you to take advantage of telemedicine technology options for your employees. For example, Aflac offers MeMD telemedicine as an Aflac funded perk to employers who offer payroll structured “Cafeteria Plans” at work. MeMD telemedicine offers 24-7 access for employees, their spouse or partner and all dependents. By giving employees 24-7 access to experienced medical doctors via telemedicine technology, this can allow your employee to have a prescription called in for a child with an earache without needing to take time off work. This is convenient for the employee and reduces lost productivity on the job. MeMD also offers counseling services to address issues such as anxiety, depression, substance abuse or marital issues that can support a more productive workforce.
Setting up Voluntary Benefits as Payroll Plan
Typically, voluntary benefits are set up through payroll deductions. This is convenient for employees and also allows for pre-tax dollars to be used, which will reduce the employee’s and his or her family’s overall tax burden. An array of voluntary benefits can be offered so that each employee can select the type of insurance that meets specific needs. Employees value this autonomy. This personalized approach is called a Cafeteria Plan. During open enrollment, employees have the opportunity to meet with the licensed insurance professional in order to be educated in the benefits options and to select the most appropriate coverage.
Be aware that using a highly qualified insurance agent who is knowledgeable about health care and insurance products is critical. You want to work with an agent who understands the needs of your business as well as someone who is an effective educator who can explain policy options in clear and meaningful terms. This makes all the difference for a successful open enrollment. You want to make sure your employees understand their benefits and how to use them. This is essential for them to appreciate the value that your decision to offer voluntary benefits adds to their well-being.
In summary, voluntary benefits are an ideal option for businesses to use as a strategic initiative to stay competitive by recruiting and retaining top talent. The future workforce trends point to voluntary benefits becoming even more important in the near future. QCBN
By Linda J. Mast, MBA, Ph.D.
Linda J. Mast, MBA, Ph.D., is a licensed independent agent and benefits consultant with Aflac. She has more than 20 years of experience in healthcare administration, health policy, insurance benefits, and education. Linda dedicates her professional practice to providing individualized service to business owners in order to recommend strategic approaches to using voluntary benefits. She is a Fellow in the American College of Medical Practice Executives, a professor in Healthcare Administration, and is a frequently invited speaker on healthcare industry trends and business strategy. To reach Linda, call (928) 582-1074 or email Linda_Mast@us.aflac.com.