Voluntary benefits are benefits that are offered to workers and their families on a purely opt-in basis. In many cases, they represent little or no additional cost to the employer, but the employer nevertheless is able to show a substantially broader list of benefits in its value proposition to employees.
For example, millions of workers own basic term life insurance via their participation in a voluntary benefits program at work. The employer simply deducts part or all of the premium from the workers’ paycheck and forwards it to the insurance company, keeping coverage in force. Where the employee pays the entire premium, the net additional cost to the employer is little or nothing.
Voluntary benefits aren’t limited to life insurance, though. Here are some popular benefits thousands of employers are already offering via a voluntary benefits/payroll deduction program:
Dental and vision plans
Cancer insurance and critical illness insurance
Long term care insurance
Permanent life insurance (such as whole life/cash value insurance)
And much more.
Strong Growth Reported
Voluntary benefit programs have shown substantial growth not just since the recession, but over the past decade. The growth is consistent, and notable across all industries, company sizes and employee age cohorts. Voluntary benefits are coming under increasing demand, and are becoming a standard offering.
A few data points:
- 71% of employees were covered under a voluntary benefits plan in 2013, up from 63% in 2012, according to the Prudential’s 8th Annual Benefits and Beyond Study.
- 51% of employers were currently implementing or have already implemented a voluntary benefits program – a huge increase over the 32% figure posted in 2012, again according to Prudential’s research team.
- Voluntary benefits sales increased 13% from 2012 to 2013, according to a survey from the Life Insurance Marketing and Research Association.
- Voluntary health benefits sales reached $2.6 billion in 2013.
- Over 68% of all employers surveyed offer term life insurance as a voluntary benefit, according to the Society for Human Resource Management.
- 46% of employers offer long-term disability insurance.
- The 2014 Aflac Workforces Report for Small Businesses shows that more than 80 percent of small business employees want access to voluntary benefits, and 60% in ten small business employees report that they would be likely to accept a job with a smaller salary but better benefits.
- 47% of small business employees report that improving their voluntary benefits package would be one way their employers would be able to keep them on the job, rather than have them go somewhere else.
Areas where substantial possible future growth is possible include veterinary insurance (now offered by only 1% of employers, but analysts are seeing tremendous untapped demand for this benefit), identity theft insurance, legal insurance, long term care, and general benefits for millennial and Generation X workers as they become more and more established and financially stable.
Big increases in voluntary benefits offerings were noted in information services, engineering, management, marketing, legal services and architecture.