In today’s tight labor market, it’s more important than ever for small business owners to do what they can to attract and retain top talent. And one of the most effective ways to not only get amazing talent in the doors at your company, but to keep them there? The right benefits package.
Voluntary benefits are a great way to show your employees you’re invested in their success and well-being—and can have a huge impact on everything from employee satisfaction to retention. But what, exactly, are voluntary benefits? Why are they so important? And what are some examples of voluntary benefits you might consider offering your team members?
What Are Voluntary Benefits?
Voluntary benefits are supplemental benefits employers can offer their employees in addition to any required benefit options. Unlike mandatory benefits (like unemployment insurance or, if you have 50 or more full-time employees, health insurance), voluntary benefits are optional.
Not only do you get to choose which and what elective benefits you offer your employees, but team members can also choose which (if any) of these employee benefits suit their needs and preferences—and can opt to add those additional benefits to their existing package.
Why Are Voluntary Benefits Important?
Voluntary benefit plans are a win-win for both the employer and the employee. Here’s how:
- Employees get to choose extra benefits that make sense for them: Employees get a choice of supplemental benefits, which allows them to customize their benefit plans in a way that best suits them. For example, if an employee is an animal lover with three dogs, they might opt in for a pet insurance benefit—while another employee that doesn’t have any pets wouldn’t need that kind of coverage and, as such, could choose to opt out. This level of customization allows employees to access the coverage that they want and need—instead of paying for a variety of insurance benefits that aren’t relevant to them. This customization can make employees feel happier with their benefits packages, which can increase employee engagement and satisfaction.
- Employees get a break on insurance: Employees will get access to group rates and pricing on insurance products they wouldn’t be able to access on an individual basis—which helps them save money on the supplemental benefits they want and need.
- Show employees you’re invested in their well-being: Offering voluntary benefits shows your team you care about them —and want to offer them the different types of benefits they need to feel safe and secure. This can help reiterate that you’re invested in your employees’ success and well-being, which can go a long way in keeping top talent with your company.
- A great perk without a huge investment: Since voluntary benefits are usually fully or partially employee-paid (generally through a payroll deduction), they don’t actually require a huge financial investment on the side of the business.
Bottom line? Voluntary benefits allow your team to customize their benefits package in a way that supports their individual wants, needs, preferences, and lifestyles—all without breaking your budget.
Top Voluntary Benefits
Clearly, offering voluntary benefits can have a hugely positive impact on both your business and your team. But what kind of voluntary benefits should you consider offering your employees? Here are the top ones we recommend:
1. Hospital Indemnity Insurance
Hospital indemnity insurance is designed to cover healthcare costs and medical expenses if an employee finds themselves in the hospital. Depending on the plan, hospital indemnity insurance either pays employees a set amount for each hospital stay—or a certain amount for every day, week, or month they’re hospitalized.
Hospital indemnity insurance is especially helpful for employees with high-deductible insurance plans, as it can help to cover the out-of-pocket expenses they might incur during their hospital stay.
2. Critical Illness Insurance
Critical illness insurance is another type of insurance meant to act as a supplemental benefit to an employee’s health insurance plan. Critical illness insurance provides additional coverage in the event an employee finds themselves facing a critical and/or chronic illness, like a heart attack, stroke, or cancer.
Because these types of illnesses often result in expensive, ongoing medical bills and illness-related expenses, critical illness insurance offers employees additional financial support to cover expenses not covered by traditional health insurance plans (for example, transportation to a specialist or childcare).
3. Accident Insurance
Similar to other types of illnesses or hospitalizations, accidental injuries can wreak havoc on a person’s financial well-being; they may find themselves facing huge medical bills or upfront costs that they weren’t prepared for. Accident insurance offers financial assistance to employees that find themselves dealing with an accidental injury. Accident insurance can help to cover out-of-pocket costs like ambulance or emergency room fees, lessening the financial burden on the employee.
4. Disability Insurance
As the name suggests, disability insurance offers coverage to employees that are diagnosed with a disability. Disability insurance replaces a portion of the participant’s salary each month (up to the cap set by the insurance company) to provide financial support while the employee navigates their disability status.
There are two types of disability insurance—short-term disability and long-term disability. Short-term disability kicks in when someone is diagnosed with a short-term disability (like surgery rehabilitation or long-haul COVID) and typically offers coverage for six months or less. On the other hand, long-term disability provides coverage when someone is dealing with a long-term, ongoing disability (like fibromyalgia or degenerative disc disease)—and will, depending on the plan, continue to provide coverage until the person recovers, after a set number of months or years, or when the employee retires.
(Keep in mind that some states mandate disability coverage through State Disability Insurance, or SDI—including California, New York, New Jersey, Hawaii, and Rhode Island. Puerto Rico also has SDI.)
5. Life Insurance
Life insurance provides financial support to chosen beneficiaries (typically family members) in the event that the insured person dies. Life insurance is generally low cost and can provide employees with a sense of peace and well-being knowing that their loved ones will have a financial safety net should something ever happen to them.
6. Dental Insurance
While some companies are required to provide medical insurance to their employees, that requirement doesn’t extend to dental insurance. Dental insurance provides coverage for routine dental care (for example, routine teeth cleanings) as well as other oral health procedures (like fillings, teeth implants, or treatment for periodontal disease).
7. Vision Insurance
Vision insurance offers employees supplemental coverage to cover costs related to their visual health, like routine eye exams and coverage for prescription eyeglasses or contacts. (Vision costs aren’t typically covered by traditional medical insurance.)
8. Long-Term Care Insurance
Long-term care insurance offers coverage for people that need intensive, long-term care for a disability, chronic medical condition or illness that isn’t typically covered by traditional medical insurance. This includes coverage for the cost of nursing homes, assisted living, in-home care, and ongoing therapies and rehabilitation services (like occupational therapy).
9. Retirement Plans
Retirement plans, like a 401(k) or IRA, allow employees to allocate pre-tax dollars towards their retirement savings. Some employers also opt to do a corporate match, agreeing to match a certain amount of their employees’ contributions each year (for example, 5 percent of an employee’s salary). Retirement plans are popular voluntary benefits because they give employees both the vehicle and, in case of an employer match, the incentive, to get serious about saving for retirement.
10. Student Loan Repayment Programs
As of 2022, approximately 43 million Americans carry student loan debt—with the average owed balance hovering at nearly $38,000.
Student loan repayment programs are voluntary benefits aimed at helping employees get rid of that debt with help from their employer. Under student loan repayment programs, employers agree to pay a specific amount towards an employee’s student loan debt on a monthly or annual basis for a predetermined timeframe (for example, $3,000 per year for five years).
From a cost perspective, student loan repayment programs are a more expensive voluntary or elective benefit for employers when compared to other options. But they can also be one of the most attractive to top talent, particularly recent grads that are saddled with large amounts of debt.
11. Legal Insurance
Legal insurance gives employees access to legal services in the event they find themselves facing legal issues. While legal insurance doesn’t cover every legal situation, it does offer coverage for a variety of common legal issues and requests (for example, drafting legal documents, like a will or prenuptial agreement; dealing with traffic violations; or filing for bankruptcy)—and can save employees thousands in legal fees.
12. Telemedicine Services
Another supplement to traditional medical insurance, telemedicine services offer employees access to virtual appointments, either by phone or video call, with healthcare providers. This can help employees save time and money when they have a health or wellness-related need that doesn’t require an in-person visit to their provider (for example, asking a medication-related question).
13. Financial Counseling
Financial counseling is a supplemental benefit that gives employees access to educational resources to support their financial well-being, like debt counseling, budgeting classes, and credit counseling. This kind of support can help employees take charge of their finances, which can lower stress and lead to better financial outcomes.
14. Pet Insurance
People care about their pets. In fact, they care about their pets so much, many are willing to go into debt in order to provide the care they need to live their happiest, healthiest lives. (According to research from Vet Advantage, nearly half of all pet owners—47 percent—reported going into debt taking care of their pet.)
But with pet insurance as an elective benefit, they may not have to. Pet insurance is like medical insurance for pets; it provides coverage for certain illnesses and injuries, which can alleviate financial stress for pet owners. (Although it’s worth noting that most pet insurance policies don’t cover routine pet care, like annual vet visits or dental cleanings—and many require pet owners to pay for medical expenses out-of-pocket and submit a claim for reimbursement.)
15. Identity Theft Protection
Identity theft protection helps to provide a layer of protection should employees ever find themselves the victim of identity theft or other types of financial fraud. This includes coverage for a variety of costs they may incur as they work to reverse the damage caused by the identity theft, including legal fees, notary fees, and coverage for lost wages.
What are the Most Common Forms of Voluntary Benefits?
According to research highlighted by the Society for Human Resource Management (SHRM), some of the most common and popular voluntary benefits for 2022 (based on employee enrollment data) include:
Use Voluntary Benefits to Attract and Retain Top Talent
Voluntary benefits are a great way to show your employees you’re invested in their health, success, and overall well-being—which goes a long way in attracting top talent to (and keeping that talent with!) your company.
And because it requires little-to-no investment on your part, it’s a cost-effective way to move the needle on employee attraction and retention. So what are you waiting for? Look into what supplemental benefits and coverage your employees might want or need—and then allow them to customize their benefits package in the way that best suits them.