An increasing number of U.S. employers now consider voluntary benefits a necessary part of their core employee benefits strategy rather than a perk or a reward, a study says.
High up on employers’ lists are student loan repayment assistance and financial planning services, but also being contemplated are identify theft protection, pet insurance, long-term care insurance and critical-illness insurance, according to the study by consulting firm Willis Towers Watson.
“Historically, employers offered voluntary benefits to supplement their core health and retirement benefit coverage,” said Lydia Jilek, director of voluntary benefits at Willis Towers Watson, in a statement. “Now, with an increasingly diverse workforce, employers no longer consider voluntary benefits as simply add-ons, but rather as a way to address a host of employee needs, offer choice and allow employees to personalize their rewards.”
The survey identified education benefits that address rising student loan debt and parents saving for children’s future college costs as important financial well-being benefits that are gaining traction. Some 8% of employers currently offer student loan consolidation programs, which could increase to 34% by 2021. Similarly, 10% of employers offer student loan refinancing arrangements, which could increase to 35% by 2021. On average, more than half of all respondents offer some form of financial planning and counseling service, which could increase another 10% by 2021.
“The good news is that improvements in enrollment technology are making it easier for employers to expand their voluntary benefit offerings—and the expanded choices are resonating,” said Sherri Bockhorst, managing director of benefits delivery and administration at Willis Towers Watson, in the statement. “We’re seeing an increasing number of employees elect voluntary benefit products.”
“Cost shifting from employers to employees has resulted in higher deductibles, higher co-insurance and higher premiums,” said Janet Buzil, vice president of marketing and product development for Chubb Workplace Benefits. “With average deductibles of $2,000 for individuals and $4,000 for families, most middle-income working families do not have enough money to cover them. These kinds of financial worries can have a negative impact on employee productivity.”
Supplemental benefits “complement and enhance the employee benefit package without direct employer expense, and they increase employee satisfaction and financial wellness,” Buzil said. “These voluntary supplemental benefits protect employees from unexpected medical expenses. Employees can choose benefits that fit their individual needs, help avoid debt, and ultimately minimize financial stress.”
“Voluntary benefits offer employers the tools to help keep employees engaged by taking the guesswork out of employees finding ways to cover some of life’s most impactful financial stressors,” said Robert Grubka, president of employee benefits at Voya Financial. “And, by signing up for these benefits at work, employees get the cost-savings benefits of the employer’s group rate.”
Take medical expenses. “With the continued shift toward high-deductible healthcare plans and the increasing costs of some treatments and medications, employees are on the hook for more out-of-pocket costs for issues related to critical illness, accidents and disabilities,” Grubka said. “Voluntary benefits are becoming more important in helping employees fill those financial gaps and protect their savings. Our own data indicates this growing importance of these products, with 30% of hardship withdrawals from Voya’s retirement plans in 2017 due to medical expenses.”
“Voluntary benefits offer flexibility for employers and employees to choose exactly what they need,” Grubka said. “Employers can choose the voluntary solutions they believe their employees will value most to complement the retirement, health and insurance programs in their benefits portfolio. Employees can select the benefits they feel will provide the best coverage for their life stages and lifestyles, at a relatively low cost for the potential protections and peace of mind they provide.”
In addition to helping attract and retain employees, “employers who offer voluntary benefits often see an increase in productivity, because employees are less distracted by unexpected financial issues,” Grubka said.