Implementing Voluntary Benefits to Reduce Employee Stress

As health care costs continue to rise, so has the demand for voluntary benefits. Since many employers find it increasingly difficult to provide employees with a complete benefit package, voluntary benefits have become an ideal solution. Voluntary benefits allow employers to offer attractive benefits without additional company expense. Employees benefit because they have a variety of insurance options available conveniently in one place, often with lower premiums than individual policies available outside the workplace.

What are voluntary benefits?

Voluntary benefits are coverages and products made available to employees for elective purchase. These programs have four key characteristics:

• 100% employee-paid
• Offered through an employer
• Solicited and enrolled through a carrier or enrollment firm
• Paid through automatic payroll deductions

Because of their cost efficiency and portability, as well as their contribution to employees’ work–life balance, voluntary benefits are becoming a central component of many companies’ overall benefits strategies.

The Real-world Costs of Financial Stress

Financial stress is a significant, ever-present burden for many Americans. Money occasionally gets tight for most, but for some, the stress never goes away.

Financial stress takes a toll on employers and employees alike. According to a recent report from Health Action Alliance, 76% of employees say financial stress negatively impacts their work output, costing businesses $183 billion annually.

These are only some of the economic tolls, but they’re not the only stressors at play—the health effects caused by financial stress can be just as significant. For example, financially stressed employees are several times more likely to suffer anxiety attacks, experience depression, miss deadlines, and produce lower-quality work than their non-financially stressed counterparts

How Employers Can Help

Financial stress can come from a variety of factors, many of which originate outside the workplace. However, regardless of its cause, employers should do what they can to help reduce their employees’ financial stress—both for the health of the employees and the business itself.

A common theme in financially stressful situations is needing something now and having to borrow money to pay for it, creating a cycle of debt. These immediate needs force employees to make financial decisions that may be outside their best interests but necessary for a given situation, such as borrowing from a 401(k) or taking out a payday loan to afford car repairs.

Why should employers consider expanding their benefit offerings to include voluntary benefits?

• Trends show these benefits have strong emotional appeal for employees and that they have come to expect employers to offer them
• There are usually no fees or costs for employers
• They complement the goals of most corporate work/life programs
• They require little post-implementation administration or support

What processes should employers follow when expanding their non-traditional voluntary benefit packages?

Employers wishing to roll out new voluntary benefits must show their support for these products for them to take off with employees. Showing support motivates workers to take notice and see the value for themselves and their families.

• Talk to employees to determine what voluntary benefits they would prefer.
• Determine which benefits are offered by your competitors, as current and prospective employees may use this information as a benchmark for evaluating your company.
• Determine the vendors that offer the most value for the lowest cost (this is very important to ensure success of a voluntary program because of employees’ perceived value).
• Determine enrollment logistics and methods. One-on-one enrollment is the most effective means of communication and provides personalized attention.
• Determine service logistics, including support for new employees, terminated employees, and re-enrollments.
• Initiate an employee communications campaign to educate employees on what plans are offered and the benefits of electing them.
• Consider offering benefits multiple times per year, not just during open enrollment. This allows employees to focus on one or two packages versus being overwhelmed with many packages all at once.
• Follow up to ensure employees are satisfied and that there are no issues with any of your voluntary benefits.

Are there any fiduciary responsibilities associated with offering voluntary benefits?

Although most employers do not contribute to the cost of this coverage, they still have a fiduciary responsibility under ERISA to police such plans if they engage in the promotion or distribution of benefits information related to these programs or allow payroll deductions on a pre-tax basis through a Section 125 cafeteria-style plan. Some voluntary benefits are not eligible for pre-tax deductions.

How are voluntary benefits administered?

As the number of available voluntary benefits increases, proportionally more time and resources are required to communicate, administer and manage such programs.
To ease this burden, employers can outsource their benefit and/or discount programs to third party administrators, automated platforms or service providers. These service providers typically charge a per-employee fee for managing the corporate discount program(s).

Consultants have extensive training in all areas of voluntary benefits and offer valuable resources. They can assist employers in negotiating more favorable benefit and cost terms with insurance carriers and enrollment firms, along with supporting the program once it is in place.

While most employers try to avoid paying third party management charges, these fees may be more affordable than the cost of internally managing the program, and third-party support often yields a more robust program in terms of access, product variety, and control.

How are voluntary benefit outcomes measured?

To ensure that voluntary benefits programs are as competitive and effective as possible, employers should measure the success of the programs every 12 to 24 months. Employers can conduct surveys to test employee awareness of, understanding of, and satisfaction with the programs. Companies can also benchmark their benefit portfolios against those offered by industry peers. Finally, employers can examine participation rates among employees to determine if they are at, above, or below industry norms with regard to re–enrollment and persistency.

Voluntary benefits may not be the right solution for all employers or individuals. Please contact your AssuredPartners team for assistance in determining if and what type of voluntary benefit plan designs are right for you.