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Voluntary Benefits Are Here to Stay

June 13, 2016 | Leave a Comment

With HHS and healthcare reform presenting a challenging health care environment, employers are looking for ways to cut costs while still providing comprehensive benefits to their employees. Voluntary benefits now fill that need and likely won’t be going away any time soon. Voluntary benefits are popular because they work, and people like them.   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, accident protection or additional life coverage? Even prepaid legal, credit protection, and pet insurance are benefits that employees are mentioning to employers as something they would like to see added to their benefits package.

Employee Retention—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 (i.e. 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 health care situation.

In the past, according to LIMRA, employers have offered voluntary worksite benefits to boost morale, attract strong candidates and retain employees. 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 the 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 health care expenses, according to Small Business Digest. 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 not only can 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 HR Directors who are smart know that the best way to improve company performance is to keep your primary assets (your employees) in good shape.

 

witten by: Drake Powers, Vice President, The Cornerstone Insurance Group

Posted in Benefits

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