When you think of benefits, you likely think of a traditional arrangement where an employer extends benefits coverage to all of the company’s employees; these are called Group Benefits, and some of the most common are life insurance, short term disability and Long Term Disability. More and more, though, companies are looking to alternative arrangements where the company pays nothing out of pocket in order to manage the high costs associated with benefits. One of the most popular options is what’s known as Voluntary Benefits, which are offered to employees at lower costs than they would normally pay. Again, there is no cost to the company offering these benefits, except for the administrative time to set up payroll deductions and hold employee enrollment meetings.
A voluntary plan is 100% paid by the employee, although you the employer has the option to contribute as well. The employee is given a range of options and selects the benefit that best suits his or her needs most closely. This a la carte approach gives employees greater control over the benefits they receive—and pay for. Maybe, an employee has a large mortgage and wants it to be paid off if he dies and wants more income insurance (a.k.a. long term disability) to make sure his family is taken care of if he becomes disabled. With voluntary benefits, employees who don’t want a specific benefit, because they know they won’t use it, aren’t obligated to purchase that benefit; instead, they pick the voluntary benefits that fit their own particular needs each at a low group rate.
Add-ons and Upgrades
While most employees favor voluntary benefits since it gives them more control and access to insurance at a lower cost than they could buy directly from an agent, many companies see Voluntary Benefits as delivering significant benefit value to their employees at no cost to the company. And combined with health insurance and the usual Group Benefits package of Short Term Disability, Dental, Life Insurance and Long Term Disability coverage, Voluntary Benefits can broaden the benefit offerings and increase significantly the value of the benefits package a company offers its employees.
Combine with a High Deductible for Added Savings
As more and more employers switch to high deductible health plans for their core employee benefits, it makes perfect sense to pair that move with voluntary benefit options. This maximizes your savings as an employer, minimizes your risk and financial obligations, and keeps your core benefits (plus some) intact for your employees.
Just how much could this plan save you? A high deductible health plan is already a money-saving mechanism: by increasing your deductible, you’ll reduce your premiums. If you raise the deductible on a single person from $500 to $2,000, you’ll see your premiums drop. Add in a health reimbursement arrangement where the company assumes the liability of the higher deductible, you save around $1,000 per employee per year. And if you’re offering dental and vision care as part of that package, consider self-insuring all three of these benefits, and you’ll see your benefits costs come down even lower—which can translate into more savings for you.