Employers are always looking for ways to improve their benefits package and attract the best employees. One way to do this is by offering voluntary benefits. Employee benefits are an important part of being an employee and can significantly impact your quality of life.
There are many types of employee benefits depending on the company’s needs. Some companies offer a wide range of benefits, while others may offer more limited options to employees. This blog will discuss the importance of voluntary benefits and more.
What Are Voluntary Benefits?
Voluntary benefits, also called fringe benefits or ancillary benefits, are employee benefits that are not required by law. The employer provides them at a discounted rate through a payroll deduction. These types of benefits are offered in addition to the legally mandated ones, such as workers’ compensation and unemployment insurance. Voluntary benefits can include health insurance, dental insurance, life insurance, disability insurance, and more.
While these benefits are not required by law, they can be extremely important to employers and employees. For employers, offering voluntary benefits can help attract and retain top talent. For employees, voluntary benefits can provide much-needed financial protection in case of an illness or injury.
Importance Of Voluntary Benefits
Voluntary benefits quickly become a necessary part of the employee health and benefits program. Here are reasons why life insurance is an important benefit to offer employees:
An Essential Benefit
Voluntary benefits are an essential part of the employee benefits program. They form a vital component of a smooth and efficient operation of the company’s workforce and, therefore, must be part of its benefits plan. The voluntary nature of these insurance products means that they are flexible enough to fit in with any benefits program and, more importantly, provide the flexibility necessary to enhance employee motivation and morale by providing something extra for their employment package.
Helps retain employees
Voluntary benefits are a way of making an employer’s employment package attractive to potential employees. If prospective workers like choosing an insurance product that fits in with their family needs, then they are more likely to see the company as a place they might want to work. This gives them a sense of worth and belonging, thus working towards retaining valuable employees who competitors would otherwise snatch away.
Companies Can Use Voluntary Benefits As Recruitment Tools
There are many benefits to employee benefits programs. Still, one of the most important is that employers can use these sorts of programs as an outstanding means of recruiting employees. When employees see how their employer has taken the time to develop a range of voluntary benefit programs, they will see the organization as a place they would like to work.
Voluntary Benefits Improve Morale Within Workforces
Employee benefits represent a win-win for employers and employees, who benefit from the organization’s strategy to make the workplace one that the workforce can enjoy. Voluntary benefits are significant because they provide employees with extra credit for their motivation and well-being.
Voluntary Benefits Are Tax-Efficient
Voluntary benefits are a great way for an employer to help employees save money on their taxes. Employees will not have to pay any taxes on their voluntary benefits, nor will they pay income tax on the benefit itself.
Voluntary Benefits Aid Employee Welfare And Development
Voluntary benefits are an excellent way of showing an employee that you care about them as a person, beyond just their role within the company’s workforce. Offering voluntary benefits can be a great way to boost the well-being of a workforce and help provide employees with any help they might need for things like illness, accidents, and even death.
Common Types Of Voluntary Benefits
Here are the common types of voluntary benefits available:
Life/Death & Accident Benefits
Life insurance, Death & Accident (AD&A), and Health Reimbursement Arrangement (HRA) are commonly used voluntary benefits in organizations. The advantage of this benefit is that employees only need to take their life insurance cover, and the money left over can be used for any other purpose. The organization can use the money left over to reduce its overall benefits bill, thus conserving resources.
Group Income Protection
Group Income Protection plans offer income protection in case of sickness or injury. Benefits are generally paid monthly and may be offered to employees who have a “clean” health history and meet age, experience, income, and other eligibility criteria. The merit of this benefit is that it reduces the need for employees to buy their insurance, thereby helping them to save money on their monthly premiums.
Employer-Provided Health Cover
Many employers opt to provide health coverage for their employees privately. Purchasing a private medical insurance policy or an Information Services Agreement basis can provide this coverage. Under these arrangements, the employer pays for the employee’s health coverage and may also pay any relevant claims made by that employee.
Disability Income Protection
Disability Income Protection plans offer income protection against disability or the loss of income due to sickness. These plans are available to employees who meet disability and medical eligibility criteria.
Sickness and Accident Cover
Sickness and Accident Cover provides benefits to employees who become unable to perform their job due to sickness or accident. Typically, employees must have worked for the employer for at least 2 months before claiming such a benefit.
Voluntary life insurance is a significant voluntary benefit that provides a lump-sum payment in the event of death. Life insurance offers flexibility in premium payment and the ability to reduce or increase policies yearly. An advantage of this benefit is that it is a deeply personal benefit and is a choice that an employee can decide to be included with their benefits package.
Critical Illness Cover
Critical Illness Cover is a voluntary product that pays out a lump sum in the event of serious illness. The lump-sum can be used towards medical care, general living expenses, and other related costs.
Paternity Cover is a lump sum payment offered to fathers of newborn children, which can be used for financial assistance with the costs associated with a new baby, such as maternity leave, childcare, and housekeeping.
Limitations Of Voluntary Benefits
Although voluntary benefits are great for helping to build an employer-employee relationship, there are certain limitations.
Voluntary Benefits Take Up Valuable Resources.
Voluntary benefits can be a great way of helping employees, but they can also take up valuable resources. Voluntary benefits may be great for helping an employee, but it is important to ensure that there are no negative implications for the organization.
They’re Don’t Offer As Much As Other Programs
Government programs such as Social Security and Medicare and employee assistance programs are extremely valuable because they come at little or no cost to employers. Social Security and Medicare are very well known, while employee assistance programs require the employer to pay a small percentage of the service cost. Because of this, voluntary benefits may not offer as much value to employees compared to other benefits provided by other organizations.
Not As Much Protection
Voluntary benefits are not as valuable as employee assistance programs and government programs because they do not have the same protection level. Employee assistance programs and government programs offer employees support in times of crisis. Still, this support is not guaranteed to be enough to meet all of the financial needs that an employee might have.
They Benefit Long-Term Employees More
Because voluntary benefits are so valuable, employers must dictate the length of time employees must work for their organization before accessing these benefits. This will benefit existing employees, but it will also help ensure that new employees want to become a permanent part of the organization.
Determining What Benefits Your Employees’ Needs
There are many different aspects to consider when choosing which benefits to offer employees. They include:
Demographics Of The Organization And Its Current Employee Population:
- The age range of the organization’s employees
- Gender breakdown
- Marital Status
Geographic Location: State and city services available to employees in the area
Industry: Legal restrictions on offering certain benefits to employees
Tax Considerations: Depending on where an employer is located, there may be incentives that exist for offering certain benefits
Benefits To Employees:
- How flexible are employees in terms of the benefits that are offered
- What is the service’s value for the organization’s bottom line
- What other services does it offer to the organization
There are many different aspects to consider when choosing which benefits to offer employees, including demographic data and tax considerations. Employers should be aware of their ability and inability to provide certain health and benefits programs and the potential repercussions of not providing them.
Start Your Benefits Plan
At Nesso Group, we believe that providing benefits to employees is an important way for an organization to show its appreciation for an employee. Our team helps you develop a benefits plan that will best suit your needs, showing your employees that they are respected and allowing them to see what they mean to your company.
Our Nesso Benefits professionals work hard to provide a plan that will give your employees flexibility in their lives. Health and benefits are a great way to ensure that employees feel secure and happy in their jobs and ensure that they will want to keep working at the organization. Don’t hesitate to reach out now to learn more about our team and how we can help.