Employers are increasingly offering voluntary benefits to employees as a recruiting and retention tool. Offering voluntary benefits allows an employer to offer a more robust benefits package without further cost.
Voluntary benefits are benefits an employee can choose to purchase that supplements traditional employer sponsored benefits, like health insurance. Common voluntary benefits are vision insurance, dental insurance, and supplemental life insurance. These voluntary benefits are available to employees at a lower cost than if an employee attempted to purchase them individually.
Possible reasons for the expansion of voluntary benefits is due to the rising cost of group health insurance. Employers have had to offset these increases by raising employee’s deductibles and co-pays. Offering voluntary benefits fills those gaps in coverage for employees. Voluntary benefits allow an employee to create a customized benefit plan. The employee can elect which voluntary benefits are right for them, rather than a one-size-fits-all plan from their employer. Additionally, employee enrollment in certain voluntary benefits will also lower employer payroll taxes.
However, offering voluntary benefits creates more administration for an employer. This means more time dedicated to enrollment meetings, payroll, and accounting. As the health insurance market is getting squeezed by the Affordable Care Act, employers should expect to hear more and more about voluntary benefits.