voluntary benefits

What are voluntary benefits?

Voluntary benefits are optional, employee-paid benefits. Commonly referred to as supplemental benefits, they have expanded with the rise of high-deductible health insurance plans and the availability of new kinds of benefits. As full-coverage medical plans have continued to get more expensive, employers are increasingly turning to personalized voluntary benefits to lower their costs and allow employees to choose the benefits that best fit their needs.

Providing a variety of voluntary benefits is seen as a key human resources and HR technology strategy organizations use to recruit and retain employees.

Technology plays an important role in helping employers provide voluntary benefits. Voluntary benefits can be provided on software platforms that enable organizations of any size to offer an array of benefits that once only could be assembled by large employers.

Software -- often cloud-based or delivered on a software-as-a-service basis -- makes possible online enrollment, individually customizable benefits, and employee self-service capabilities and gives outsourcing vendors and brokers the ability to easily aggregate benefit plans. Some software systems can deliver personalized benefits recommendations to workers based on their responses to detailed surveys.

Examples of voluntary benefits

In addition to standard benefits such as dental, critical illness, life and accident insurance, employers provide other voluntary benefits options that have become popular.

Types of voluntary benefits include the following:

• Pet insurance.
• Corporate wellness programs.
• Financial counseling.
• Identity theft insurance.
• Student loan repayment.
• Personal travel insurance.
• Legal services.
• Long-term care insurance.
• Hospital indemnity insurance.
• Retail discounts.
• Concierge services, such as shopping and errand assistance.

Advantages of voluntary benefits to employers

In addition to helping to attract and keep high-performing employees and reduce turnover, voluntary benefits can allow employers to provide the benefits that newer generations of employees most want and to tailor them to their lifestyles. Student loan consolidation and repayment programs are an example.

Voluntary benefits can also help organizations fill in gaps between mostly employer-paid benefits such as health and disability insurance. For example, no- or low-deductible hospital indemnity plans can cover many out-of-pocket healthcare costs for inpatient and outpatient care.

Advantages of voluntary benefits to employees

With voluntary benefits, employees can choose the benefits they want, and not pay for benefits they may not need, such as expensive low-deductible health insurance plans. Some employers contribute part of the cost.

An advantage is that employees can buy benefits offerings at reduced, group rates. Another is convenience; employees can pay for voluntary benefits by payroll deduction, often using pretax money, thereby realizing savings.