Voluntary benefits are becoming increasingly in demand with employers and employees—a trend sparked by the pandemic and fueled by the Great Resignation. Workers have become more security-minded, and employers are more committed to attracting and retaining talent.
According to a recent survey by Aon, 41% of its employer clients offered workers new or additional voluntary benefits in 2021 and early 2022.
“Employers during the last two open enrollment cycles were focused on using voluntary benefits to improve total rewards strategies and bolstering workforce resilience in order to retain talent,” said Greg Morano, U.S. practice leader for consumer benefit solutions at Aon, in a written statement.
Voluntary benefits—which employers offer to workers on a purely elective basis—are considered supplemental to core employee benefits like health insurance. Premiums are funded by workers through payroll deduction.
Stunningly, nearly three-quarters of the surveyed employees indicated that they are more likely to work for employers that offer voluntary benefits. That said, some benefits are more popular than others—and savvy employers are taking note.
What Workers Want: More Health Care Benefits, Please
As a result of the pandemic, people are more aware of the health risks they face. Not surprisingly, Aon found that the fastest-growing voluntary benefits include supplemental health insurance coverages, including:
- Critical illness protection: This benefit pays lump-sum payments when covered employees experience catastrophic illnesses or events, such as cancer, a heart attack or stroke.
- Accident insurance: This benefit provides payouts when covered employees are killed or injured as a result of an accident.
- Hospital indemnity coverage: This benefit pays specific benefits when covered employees are admitted or readmitted to a hospital.
All of these benefits are paid in addition to a covered employee’s core health care benefits, offering additional layers of protection.
When Willis Towers Watson conducted a comparable survey in 2021, it discovered similar findings. Not only were more employers enriching their benefit offerings with voluntary products, but also critical illness and hospital indemnity coverages were among their top picks.
Employees Prize Financial Protection, Too
In addition, increasingly popular voluntary benefits include those that offer financial protection against unexpected events and expenses. For example, Aon includes whole life insurance and short-term disability on its list of fastest-growing benefits as well as student loan assistance.
In a similar vein, Willis Towers Watson found identity theft protection, legal and financial planning services, and tuition reimbursement are among the most popular ancillary benefits.
Interestingly, both researchers noted an increased interest in offering and purchasing pet insurance—a likely fetching offering caused by the pandemic pet adoption boom.
A Powerful Recruiting and Retention Tool
Savvy employers recognize that offering employees a meaningful portfolio of voluntary benefits is a compelling, cost-effective recruiting and retention strategy. The fact that employers need not fund these benefits, but simply administer them, makes them that much more appealing.
To that end, employers need a human capital management system with robust benefits administration capabilities—one that can handle high-volume enrollments, complex payroll deductions and everything in-between. They should turn to a platform with an easy-to-use mobile app for employees, plus administrative services, such as COBRA and Affordable Care Act (ACA) reporting, if needed.
Of course, in this complex, competitive business environment, employers already should understand that voluntary benefits are really mandatory for companies to offer. Beyond that, the more easily employers can provide and manage the voluntary benefits their employees value, the happier everyone in the workplace will be.