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Your Business’ Guide to Voluntary Benefits

Part of running a successful business is keeping employees happy. Offering a competitive salary, positive work environment and standard benefits package plays a big part in that. Have you wondered, though, whether you should offer your employees voluntary benefits as well? This guide will help you learn more about voluntary benefits and determine whether you should implement them in your business.

 

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What are voluntary benefits?

Voluntary benefits, sometimes called supplemental or fringe benefits, are products employers offer to employees at low or no cost to the employee. These could include options for lower-cost auto insurance, pet insurance and other products that employees would traditionally buy independently.

 

What are some advantages to voluntary benefit plans?

Like any business, you want to attract and retain talent. If you’re a small or medium-sized business, perhaps you can’t offer benefits packages as expansive as much larger corporations. Providing employees with voluntary benefits can help mitigate that difference without the costs associated with standard benefits. A majority of employees surveyed by Zenefits, an HR software company, deemed such perks an important workplace advantage. Considering this, offering supplemental benefits in addition to the standard ones can make your workplace more attractive to job seekers. 

 

Such offerings may also help you retain talent. Happy employees normally don’t want to leave their jobs. 

 

These rewards are only realized, though, with employee buy-in. Make your employees aware of how voluntary benefits can save them money and time. Communicating the following advantages can help current and potential employees appreciate what you’re offering:

 

  • Supplemental benefits give employees low-cost options for benefits they may need but can’t afford. Since group rates are often lower than individual rates for certain benefits like life insurance, employees save money.
  • Voluntary employee benefits programs provide easier access to plans that your employees may not have otherwise considered: You’ve researched the plans for your employees. They only need to enroll.
  • Another advantage is that such supplemental plans may fill in the gaps in your current standard benefits package. For instance, you might offer your employees a higher-deductible health insurance plan with lower premiums. You might also provide a critical care plan as part of supplemental benefits. Employees can select the lower-premium health insurance plan and choose the supplemental critical care benefit, which may lower their overall health insurance costs.

What voluntary benefits are best for your business?

These are some common voluntary employee benefits:

 

  • Life insurance
  • Critical care insurance
  • Pet health insurance
  • Identity theft protection
  • Legal assistance
  • Auto insurance
  • Health savings account

That list isn’t meant to be prescriptive. The voluntary benefits that will best suit your business depend on your employees’ demographics and preferences.

 

For example, if your workforce mainly comprises parents of school-aged children, your employees might be interested in critical care benefits. If many of your employees are recent college graduates, student loan repayment could be an attractive benefit (albeit more costly to you). A diverse workforce would be best served with a range of options.

 

Also, consider which voluntary benefits complement the standard benefits you currently offer employees. For example, suppose health and dental insurance are part of your standard employee benefits package but not vision. You could offer a vision plan as part of a supplemental benefits option. This allows employees to opt-in, potentially at a lower cost if you’ve negotiated a plan through your current benefits broker.

 

Besides demographics, consider your employees’ preferences. What benefits do they value? Learning that before you decide what supplemental benefits to offer can help maximize enrollment. Survey employees to learn what benefits they prefer. Your survey might list some common voluntary benefits employees can rank by preference. Surveying your employees before you decide what to offer will help you narrow down the choices.

 

Besides employee demographics and preferences, consider your industry. For instance, identity theft protection is a logical benefit for IT companies. It not only protects employees, but it also protects the company from potential information leaks of content from employees’ personal computing devices.

 

In short, the best voluntary benefits suit your employees and your industry.

 

Establishing a voluntary benefits plan for your business

Deciding to offer supplemental benefits is just the first step. Implementation takes careful planning. The initial setup is important. If done correctly, this potential boon to employees doesn’t have to be a lasting burden on your human resource department. It also doesn’t need to be costly, depending on what you offer. Get started with the following guideline, which you can fine-tune to your needs:

 

What kinds of benefits to offer

Research common voluntary benefits (such as the list offered previously in this article). Determine which ones best align with your workforce demographic and industry needs.

 

Contact your current brokers to learn what types of supplemental benefits they offer. 

 

Also, consider the potential cost and whether certain benefits have a minimum enrollment number. Some voluntary benefits, such as student loan reimbursement, can be expensive, and you would need to know that before you put it on your tentative list.

 

All these factors can help you to create a tentative list of potential voluntary benefits. 

 

Survey your employees

Once you’ve created a tentative supplemental benefits list, survey your employees to get their input. One option is to present several volunteer benefits and ask employees to rank them by preference. Such a survey may also include an “other” option with a comment section.

 

Research brokers

Use your employee survey results to identify several voluntary benefits. Research the costs of each benefit by contacting your current brokers. Also, research and contact new brokers for proposals.

 

During this step, you’ll better understand the costs associated with the benefits you’d like to offer, so you may need to revise your list.  

 

Set parameters

Identifying which voluntary benefits to offer is a big step, but there’s still more planning to do before presenting the list to employees. Set parameters around cost and enrollment period.

 

Determine the benefits you will contribute to and which ones employees will be solely responsible for. 

 

Decide when employees can enroll. Offering enrollment in supplemental benefits during the same period as open enrollment for health insurance benefits and flexible spending accounts provides consistency, which may encourage enrollment. Employees are more focused on their benefits at that time, so they may also be more alert to signing up for voluntary benefits. On the other hand, some organizations have year-round enrollment, which could be more convenient for employees, thereby encouraging enrollment.

 

Identify communication channels

If you’ve done the legwork to offer some great perks to your employees, you’ll want to encourage them to take advantage of them. Apprising employees of voluntary benefits doesn’t need to be complicated. Informing supervisors, sending intranet notifications to employees, and having a simplified online sign-up procedure are simple ways to increase employee awareness and interest in supplemental benefits.

 

Educate your hiring staff

Once you’ve determined what to offer, ensure that your human resources professionals or hiring managers have a clear understanding of each benefit. Employees will undoubtedly have questions, especially during the initial rollout. If your HR team is prepared with answers, that will encourage employees to enroll. 

 

Taking the proper initial steps will help you avoid pitfalls that may discourage employee buy-in.

 

Frequently asked questions about voluntary benefits

Do voluntary benefits programs require enrollment minimums?

The answer depends on the benefits brokers you’ve selected. If your broker requires a minimum number of employees, one way to reach that is to expand the type of employee you offer voluntary benefits to. For instance, if you previously considered offering such benefits only to full-time employees, you may want to expand that to part-time employees.  

 

Are voluntary benefits taxable?

Since the employee costs of many standard benefits are deducted pre-tax, it’s important to be clear about the tax situation of voluntary benefits. Whether a voluntary benefit is taxable depends on the benefit. Some voluntary benefits like health savings accounts are deducted pre-tax, which can lower your employees’ tax bills. Also, if you offer a student loan repayment benefit, any payments up to $5,250 per year that you make from March 27, 2020 to before January 1, 2026 do not become part of your employees’ tax bill

 

Other nonstandard benefits, such as identify theft protection and pet health insurance, are normally deducted post-tax. This tax information should be part of the initial information rollout of the benefits.

 

Final thoughts

Voluntary benefits are an easy, low-cost way to attract new talent and increase employee satisfaction. A small investment in time and money (depending on the type of benefits) can garner rich rewards in employee satisfaction.

 

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