Companies frequently combine voluntary and core benefits to form robust benefit packages that meet the needs of today’s diverse workforce. Combinations are carefully selected to meet a broad range of needs and provide a competitive edge in attracting, motivating, and retaining talent.   

Core benefit definition

Health insurance and retirement plans have traditionally been central to employee benefit packages. The same is true for basic life insurance with a death benefit equivalent to the employee’s annual salary. These so-called core benefits are commonly provided to eligible workers and their dependents and frequently paid for in full or large part by the employer. 

Voluntary benefit definition

Employers supplement core offerings with attractive elective benefits that are tailored to the demographics of their employees. They’re referred to as “voluntary” benefits because they are optional, and employees are free to elect or decline them. Depending on the employer, benefits may also be available to eligible dependents.

In most cases, employees will pay the entire cost of the voluntary benefits they choose, both for themselves and eligible dependents; however, the charges generally reflect group rates that are well below market. Payroll deduction simplifies payment and can be set up on a pre-tax or post-tax basis as warranted. Another advantage is that voluntary benefits may be portable, in which case employees who leave may take the lower cost group products with them. 

Employees typically enroll or make changes to their voluntary benefits during the annual open enrollment period for core benefits. This timing allows employees to view and analyze their entire benefit package holistically and make smart, well-informed decisions.

What makes an employee benefit voluntary?
It’s available for elective purchase.
It’s paid for by the employee, not the employer.

Common types of voluntary benefits 

A wide variety of voluntary benefits are available today. The following four are among the most common:

• Supplemental life insurance protection
  • Many employees, especially those with young families, appreciate having ample life insurance, and that means having a higher death benefit than the core benefit provides.  With a supplemental life insurance benefit, employees can elect to buy more protection, available as multiples of salary.  Some employers provide a choice of products, including term insurance for a set period, or permanent protection with the opportunity for cash value accumulation.

• Neither the core life insurance benefit nor lower levels of supplemental coverage require a medical exam or healthcare questionnaire, making them ideal options for older workers who may not be able to qualify for insurance at affordable rates if at all.

• Vision coverage
  • Provides discounts or insurance for eye exams, glasses and contacts, and other vision care needs. Some policies also offer discounts on surgery that eliminates the need for glasses.

• Dental coverage
  • Offers discounts or insurance for dental care like check-ups, cleanings, x-rays, and other preventive services. Some policies may offer broader coverage at a higher cost for fillings, implants, and more.

• Short-and long-term disability insurance
  • Replaces a portion of earned income that is lost when an individual can’t work due to illness, accident, or injury. Short-term coverage generally covers claims lasting 10 to 26 weeks, while long-term protection covers longer or permanent disabilities until age 65. 

• Accidental death and dismemberment insurance
  • Offers financial security by helping to replace income in the event of a covered accident that leads to death, loss of a limb, or loss of function such as vision, hearing, and speech.

Increasing popularity of voluntary benefits

Voluntary benefits can be a win-win for both employer and employee. Workers appreciate having a broad range of benefits to choose from even if they don’t elect to participate. That appreciation can translate into increased job satisfaction, greater productivity and enhanced loyalty, all at little or no cost to the business. 

Call to action:

For information and assistance on building a robust benefits package that’s cost-effective and customized to the needs of your employees, contact our Daybright Financial team today!

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