Individualization, customization — call it what you want. It’s certainly the operative word in today’s benefits world.
The more benefits, the better. Workers want benefits that suit their needs. Employers who offer a variety of benefits are more successful with their recruitment and retention efforts, even if many of the offerings are voluntary benefits — ones that workers usually pay for in full, without employer contribution.
Both traditional and nontraditional voluntary benefits are now considered essential elements of a benefit program that attracts and retains employees. It’s no mystery why voluntary benefits have gone mainstream. With voluntary benefits, employees can choose products that complement their company-sponsored core benefits and round out a benefit portfolio that suits their individual needs. In many cases, the voluntary benefits that employees choose are products that enhance their lifestyle, allow them to acquire products and services they might not otherwise be able to afford, and further their personal improvement and financial wellness.
Traditional voluntary benefits such as gap coverage, short-term disability, cancer, critical illness, dental and hospital supplemental policies are important offerings that augment employees’ health care coverage needs. But it’s the virtual smorgasbord of nontraditional voluntary benefits that gives employees perhaps the most leverage to customize their employee benefits preferences. Nontraditional products include everything from banking and buying options to lifestyle and convenience options to personal care and improvement options to financial safety nets.
Why Employees Choose Voluntary Benefits
Employees look to voluntary benefits to fulfill various wants and needs. In June, full-time employees were asked in a Harris Poll to list the purposes that voluntary benefits serve for them, and 73 percent of respondents answered that at least one of the following applied to them. Here are the highest priorities among those who responded:
» Provide me with a financial safety net — 44 percent
» Allow me to access benefits at a group rate rather than a higher individual premium — 43 percent
» Protect my overall well-being — 39 percent
» Make life easier/more convenient — 38 percent
» Allow me access to services that I couldn’t get on my own — 33 percent
» Support my long-term goals — 33 percent
Many factors contribute to an employer’s selection of voluntary benefits. These factors can include corporate culture, demographics, employee demand, corporate policies, overall perceived value and existing gaps within the core benefits offering. However, at the heart of the decision, companies want to find more ways to engage with their employees. A comprehensive and well-thought-out benefits package shows employees that their company cares about them as individuals.
Seeing Things Differently
Voluntary benefits certainly make the employee benefits package more attractive for both recruitment and retention purposes, but many workers believe their employers could go further in the diversity of offerings. Findings from surveys of workers in the Harris Poll, as well as from employers as part of a Human Resource Executive survey, show that there is a differing opinion on some aspects of voluntary benefit offerings. Here’s what we found:
1. Employers and workers agree on the importance of voluntary benefits. Ninety percent of employers and 86 percent of workers say offering voluntary benefits is very or somewhat important.
2. Employers and workers disagree on whether the voluntary benefits offered by their company reflect the diversity of the workforce. Among the employers surveyed, 78 percent think that the voluntary benefits their company offers reflect the diverse needs of their workers, yet only 29 percent of workers strongly agree that they do.
3. It’s important to have choice. Among workers surveyed, 93 percent say it is very or somewhat important that they be able to choose benefits based on their particular needs, such as ones that enhance their lifestyle, protect their well-being and improve their financial wellness.
4. Offering nontraditional voluntary benefits is important. Only 29 percent of workers say their or their spouse’s employer offers nontraditional voluntary benefits, but 48 percent of those whose company doesn’t offer these benefits would like them to. Further, 54 percent of employers say they don’t offer nontraditional voluntary benefits, and 78 percent of employers say they don’t anticipate offering any additional nontraditional voluntary benefits.
Which Voluntary Benefits to Offer
Meeting the multigenerational and diversity needs of today’s workforce is important, and voluntary benefits aren’t one-size-fits-all. Workers have varying needs, and they want a variety of benefits from which to choose.
The latest benefit trends study from MetLife shows that the more voluntary benefit options employees have, the happier and more loyal they are. This certainly demonstrates to employers that they need to offer a variety of voluntary benefits. In fact, the MetLife study reported that increased employee satisfaction is found at companies that offer 11 or more benefits.
The variety of voluntary benefits offered by employers should include both traditional and nontraditional products. According to the Eastbridge 2015 Voluntary Survey, the five most frequently sold traditional voluntary products are term life insurance, short-term disability, dental insurance, accident insurance and critical illness insurance. The same survey reports that the most popular of the nontraditional voluntary products sold are wellness programs. Others include identity theft coverage, legal plans, discount health programs, pet insurance, computer/appliance/furniture purchase programs and vacation programs.
Today’s diverse workforce spans three generations who look at work, life, money and finances in totally different ways and thus have varying benefits needs and preferences. Nontraditional voluntary benefits provide options for these generations’ diverse needs. From pet insurance to cybersecurity insurance, from elder care to legal plans, from employee purchase programs to identity theft protection — there’s something for everyone. The ability to choose benefits that meet their life-stage needs is something workers want.
The employee benefits package often is viewed as an indication of how an organization values its employees. That is especially important to millennials. According to a study by Aon Hewitt, not only will millennials make up half of the workforce this year, but nearly one half of them plan to change jobs in the next year. Millennials job-hop to advance their careers and improve their pay and benefits.
In addition to offering a variety of benefits, it’s imperative that employers tailor communications to help workers understand everything that is available to them. Communicating during open enrollment season may not be enough. Year-long communications, educational tools, online programs, one-on-one in-person meetings, group in-person meetings and benefit fairs are all tactics that can help to make sure workers receive the information they need to make better benefits decisions.
When evaluating voluntary benefits offerings, employers usually focus on worker demographics. But using data analytics to target employees more specifically leads to better success in creating an appropriate voluntary benefits package. Using an advanced analytical approach, creating an employer benefits profile report through an employer profile analysis, and implementing worker segmentation and predictive modeling can yield higher business value and a better worker experience.
As a result, employers who have added more voluntary benefits — both traditional and nontraditional — are finding that their recruitment and retention objectives are bolstered and that their workers are more satisfied and loyal.