Voluntary Benefits 101

As the worker-pay-all model gains momentum, biz owners should learn the pros and cons of voluntary benefits.

If you're like millions of business owners, the economy has probably forced you to do one or more of the following: increase the amount your employee has to pay or altogether eliminate a benefit--even health insurance--to cut costs. If so, you're searching for ways to keep your overall benefits package attractive to existing employees and new talent. Enter voluntary benefits. 

According to a 2008 study by the Employee Benefit Research Institute, employer-paid benefits are declining while worker-pay-all benefits are increasing. These trends are "likely to continue," according to the report, but fewer than one-third of workers are willing to pay on their own without at least some employer funding. This leaves employers with the challenge of offering attractive, employer-funded benefits packages to keep workers happy, while striving to cut company costs at the same time. This article discusses some of the available benefits options, and their associated pros.

How can businesses offer employees discounted access to services, i.e., rather than pay for a set kind of insurance, can they offer a menu of different options for employees, such as pet insurance, a specific kind of medical insurance (like cancer insurance) or any other possibilities?
Although many factors contribute to a successful benefits program, one key to any successful benefits plan is a structure that permits employees substantive and economic choice. Some plan structures are more suitable for that flexibility, but nothing prevents any employer from allowing employees to self-direct funds to any benefits plan the employer offers. Typically, it is much easier for [an HR outsourcer] to do this, because they're able to secure multiple plans, benefits and perks, and make them available to employees.

What are some ways to restructure perks, rather than eliminate them?
Helping companies get creative in restructuring their perks can really help save money and strike a balance in tough times. [We] recently helped a customer allocate their benefits spending more effectively, leading to a more robust benefits strategy than they'd previously offered on their own. In turn, the customer realized a $250,000 annual savings to their bottom line. How? [We] converted them from fully funding a traditional PPO to fully funding a high-deductible health plan and fully funding the employees' health savings account.

What role can voluntary benefits play in building a robust benefits package that is beneficial to employer and employee? What do employers get from offering voluntary benefits? What do employees receive?
Voluntary benefits are an excellent way for a smaller company to establish its brand as an employer of choice, and compete with larger, more known organizations for top-quality talent. This is a huge value-add [for employers], because they're able to say, "You not only get the great suite of medical/dental/vision, but also everything from flexible spending accounts to pet insurance to entertainment/hotel discounts." For a small company that needs to attract and retain in-demand workers, this can often be a game changer.