Why Having Voluntary Benefits is Important for Employees

Why Having Voluntary Benefits is Important for Employees

The way we work is going through big changes, with many people leaving their jobs, the ongoing impact of the pandemic on businesses, and the permanent shift to hybrid work models. These changes are also affecting the kinds of benefits people want, and there's a growing demand for more comprehensive benefits plans. In fact, 60 percent of people wish their employers would offer extra health coverage.

But what exactly is extra health coverage, and why is it crucial for attracting talent and making sure your employees have what they need to be productive? Let's explore.

Voluntary health coverage typically includes three main products: accident, critical illness, and hospital coverage. It's often called "voluntary benefits" because employers offer these products, but employees have to pay for the premiums if they choose to sign up. Unlike benefits such as dental and vision, which are usually paid for by employers, extra health coverage falls under a different category known as "ancillary coverage."

In the past, extra health coverage wasn't seen as essential. Over the last decade, healthcare expenses have risen by 47 percent, outpacing inflation and wage growth. Many employers had to make tough choices between controlling costs, lowering health coverage quality, or increasing costs and sacrificing other benefits. This led to a focus on core health plans, with extra health plans being somewhat overlooked.

However, the need for voluntary health benefits has become more apparent, especially considering the misunderstandings surrounding them. For example, some employees may think their regular health insurance covers long hospital stays, so they might skip enrolling in extra coverage. Employers, thinking the same way, may not offer these supplemental plans to their employees.

In reality, for those with high-deductible medical plans, a lengthy hospital stay could quickly deplete their savings, leaving them vulnerable. This vulnerability has become more evident during the global pandemic.

To address this, employers and their benefit advisors need to put more effort into offering and explaining the value of supplemental benefits.

Today, 90 percent of employees believe the need for voluntary insurance has increased since the start of the pandemic, and there are three main reasons why.

Firstly, the pandemic has made people focus more on their health. In a 2020 study, 43 percent of respondents said COVID-19 made them pay more attention to their health. Additionally, new life insurance premiums increased by 44 percent in 2021.

Secondly, the rise of remote work has emphasized the need for benefits that are centered around individuals rather than offices. For example, 43 percent of adults want to continue using telehealth services even after the pandemic ends.

Lastly, the competitive job market plays a role. With almost twice as many job openings as there are job seekers, offering supplemental health benefits has become a key selling point for employers. Even a 5.1 percent wage increase wouldn't bring labor participation back to pre-pandemic levels, as Millennials and Gen X prioritize other benefits.

Large corporations are in a good position to offer supplemental health benefits, but smaller businesses may struggle. They can level the playing field by partnering with a quality insurance provider that handles everything from enrollment to customer support. Additionally, offering more supplemental health or subsidizing its cost can be a competitive advantage.

Today's employees are interested in more than just perks like ping pong tables and beer on tap. Mental health coverage is increasingly popular, and companies can set themselves apart by offering subscriptions to meditation apps or providing stipends for mental wellness.

The best benefits plan varies for each employer, and as the benefits landscape keeps evolving, business leaders should regularly survey their workforce. This helps tailor supplemental health benefits to the specific needs and preferences of their employees, showing that they care about them as professionals and as individuals.

Let us know what questions you have. Our years of experience working with all industries we can find the solutions you need together.