Long viewed as a value-add, a growing number of U.S. employers now consider voluntary benefits an integral component of their core employee benefit strategy. Employers are expanding their menu of voluntary benefits and services to help workers address their overall financial well-being and security. Almost 70 percent of employers said voluntary benefits and services will be an important part of their employee value proposition in the next three-to-five years making this market ripe for growth.
Companies are using voluntary benefits to enrich their offerings without additional cost. Customization, ease of use and options make voluntary benefits an attractive recruiting tool. These benefits are a cost-efficient way to provide additional coverage to employees, and they can help employers attract and retain talented employees, who tend to migrate to employers who offer benefit choice flexibility. Employees also see great value in voluntary benefits when they are able to purchase through their employer at a lower group rate compared with the individual market.
Historically, employers offered voluntary benefits to supplement their core health and retirement benefit coverage. “Now, with an increasingly diverse workforce, employers no longer consider voluntary benefits as add-ons, but rather as a way to address a host of employee needs, offer choice and allow employees to personalize their rewards,” said Lydia Jilek, director, Voluntary Benefits, Willis Towers Watson.
The market opportunity is vast and growing
Only 5% of employers said voluntary benefits will have little importance to their employee value proposition. Compare that to five years ago when 41% of employers said voluntary benefits would have little importance. And more than two-thirds of employers (69%) believe voluntary benefits will be a very important component of their employee value proposition in three to five years, nearly double the percentage (36%) who currently feel this way.
More employers planning to offer student loan repayment assistance and financial planning services
Here are the benefits/coverages you should keep your eye on while you plan for product design, enhancements and marketing of the benefits offered:
- Education benefits that address rising student loan debts and parents saving for children’s future college cost are the most important financial well-being benefits that are gaining traction. 8% of employers currently offer student loan consolidation programs, which could increase to 34% by 2021.
- Student loan repayment programs are still relatively new; only 4 percent of companies offered them in 2017, according to a survey by the Society for Human Resource Management. However, as more young people come to the workforce with crippling college debt, these kinds of programs could become attractive recruiting and retention tools. Millennials change jobs every two to three years. Employers can use this kind of program to get and keep the best talent
- Identify theft protection: These programs help employees to both protect their identity from hackers, and to recover when theft has taken place. It is driven by the world we live in “right now.” 36% of employers currently offer— this could increase to 63% by 2021
- Pet insurance: Everyone loves their beloved pets but right now 34% of employers currently offer— this could increase to 57% by 2021
And then there are these not often thought off, but unforeseen circumstances employees should be planning for.
- Long-term care insurance: 16% of employers currently offer — could double to 33% by 2021
- Critical-illness insurance: 43% of employers currently offer — could increase to 71% by 2021
- Hospital indemnity: 24% of employers currently offer — could more than double to 50% by 2021
Add these to your benefit offering, and market them aggressively to capture employer attention.
Hot product design trends to keep your eye on as this market increases are — financial wellness counseling (overall financial planning advice), bundling in auto and home, legal help, and even genomic mapping.
The right fit – getting your pitch right
All of these programs can add value, though companies should be thoughtful about what they offer. There are so many innovative programs out there, but you have to fit them to the demographics of the company. Before you even begin pitching a comprehensive voluntary benefits program to a company, do your research on the profile of the company — age group, family status etc. Oftentimes this can be easily done just through some quick searching on the company website and LinkedIn.
Ease of offering is important – to employers and employees
Improvements in enrollment technology are making it easier for employers to expand their voluntary benefit offerings. Even though employers don’t pay for these benefits, managing so many offerings can be an administrative nightmare. Administration is the top obstacle companies face with these programs. Make enrollment easy, and thinking through adoption are key. This gives benefits providers the opportunity to add value for their clients by creating simple solutions to ease program management. We’ll be talking more in-depth about employee adoption in our next article.
With data from the 2018 Emerging Trends: Voluntary Benefits and Services Survey by Willis Towers Watson.