According to a survey released by the International Foundation of Employee Benefit Plans and co-sponsored by Employee Benefit News, voluntary benefits are a fundamental part of employers’ benefit plans. Employers are offering voluntary options as way to better meet the needs of a diverse workforce.
Eighty-four percent of the employers who responded to the survey currently offer voluntary benefits and an additional 5 percent plan to offer voluntary benefits in the future. The survey defined voluntary benefits as supplementary benefits made available by an employer often at a group rate or premium discount to employees.
“The survey shows voluntary benefits are a significant part of plan sponsors’ strategic benefits approach and they are poised to increase in prevalence in the coming years. These benefits improve employee satisfaction, with minimal administrative costs for employers,” summarized Sally Natchek, Senior Director of Research at the International Foundation of Employee Benefit Plans.
Of the employers who offer voluntary products, the most common options provided include term life insurance (73 percent), vision insurance (53 percent), long-term care insurance (51 percent), long-term disability insurance (50 percent), accident insurance (49 percent) and dental insurance (48 percent).
“Long term care is one of the fastest growing voluntary benefits,” explained Natchek. “Aging baby boomers, who have perhaps experienced the overwhelming costs of custodial care with a parent, are expected to drive the future trend in purchasing long term care insurance.”
A smaller, but still significant number of employers offer newer niche voluntary products including automobile insurance (32 percent), homeowners’/renters’ insurance (29 percent), debt counseling and financial planning (22 percent), identify theft coverage (22 percent), college savings plans (21 percent) and pet insurance (19 percent).
Large and Small Employers Offer Voluntary Benefits to Better Meet Their Employees’ Needs
The majority of employers, 68 percent, identify providing employees access to a greater array of benefits and supporting employee choice and flexibility as the main reason for offering voluntary benefits. Other reasons reported include filling gaps in employer-sponsored benefits (42 percent) and helping employers get better prices at group rates (41 percent). Very few employers, only 4 percent, indicated that supplementing or replacing employer-sponsored benefits that have been reduced or eliminated, is a top reason why they offer voluntary benefits.
“Workers are taking more accountability for their own future, preferring to pick and choose their benefits based on their specific needs and costs,” stated Natchek.
Slightly more than three-quarters of employers (76 percent) agree or strongly agree that voluntary benefits are a win-win supplement to an organization’s benefits package. Employers indicate that their employees have an overwhelmingly positive reaction to voluntary benefits, with 89 percent agreeing their employees have a positive view of the benefits. No employers reported negative employee reactions.
The large majority (78 percent) of responding employers believe that offering voluntary benefits results in only slight or moderate increases in administrative costs.
Employee Participation Levels and Reasons for Participating Vary Widely
Employers indicate various levels of voluntary benefit participation among their employees. The most common participation rate is 20 percent-40 percent, reported by 23 percent of employers. Nine percent reported that less than 10 percent of their employees purchase at least one voluntary benefit, while 10 percent report that more than 80 percent of their employees participate in at least one voluntary benefit program.
The majority of employers, 66 percent, have not seen participation levels change during the past year. However of those who have seen changes, nearly twice as many (14.4 percent) report participation has increased than those who report decreases (7.9 percent).
Of the employers reporting increases, just over half (52 percent) cite employees appreciating a broader range of benefits as a reason participation increased. Employees assuming more responsibility for their health and welfare is another significant reason for increased participation, cited by 43 percent of employers.
Other reasons for increased participation appear to be a direct effect of the economy. A quarter of employers (26 percent) report that employees seeking ways to mange risk is a reason for increased participation. This is followed by employees looking for advice and guidance on financial loss (23 percent), seeking way to cover themselves and/or dependents as a result of spousal job loss (23 percent) and seeking portable benefits due to decreased job security (12 percent).
A small number of employers reported decreased participation during the past year (8 percent); the large majority of these employers, 83 percent, attribute the decline to employees who are unable to afford the benefit.
Voluntary Benefits Expected To Grow In Popularity
Looking towards the future, the majority of employers, 80 percent, agree or strongly agree that with the aging of baby boomers, voluntary products with guaranteed issue provisions (meaning applicants cannot be denied coverage based on their health status) will become more popular and participation will increase.
Employers also feel that portability will continue to be an important characteristic (88 percent) and 50 percent of employers think voluntary benefits will increase if phased retirement become popular. The majority (69 percent) believe employee education about financial literacy and personal responsibility/accountability will increase employees’ perceived value of voluntary benefits.
The survey, Top Trends in Voluntary Benefits: Survey Results, was conducted in late August/early September 2009. Responses were received from 833 individuals in the United States; a large majority of these individuals represent corporations (91 percent). Those asked to participate in the survey were corporate members of the International Foundation of Employee Benefit Plans, members of the International Society of Certified Employee Benefit Specialists, and subscribers to Employee Benefit News.
Top Trends in Voluntary Benefits: Survey Results (Item #6795E) is published by the International Foundation of Employee Benefit Plans. The 22-page survey costs $50. To order visit http://www.ifebp.org/books.asp?6795E or contact the Foundation Bookstore at bookstore@ifebp.org or 888-334-3327, option 4.
The International Foundation of Employee Benefit Plans is a non-profit organization, dedicated to being a leading objective and independent global source of employee benefits, compensation, and financial literacy education and information.
Employee Benefit News is written for private- and public-sector benefit plan sponsors with U.S. and global workforces looking for creative new ways to purchase, administer and benchmark their benefits programs.