What are Voluntary Benefits?
Voluntary benefits are insurance products that employees may choose to purchase through their companies at rates that are lower than they could get on their own. A few examples of voluntary benefits are dental, vision, life, disability, supplemental health and cancer insurance. Many employers offer voluntary benefits because they allow companies to provide a more robust benefits package at no cost to them.
How do voluntary benefits work for employees?
For an example of how voluntary benefits work we'll need our good friends Gary and Greta. Tonight, they're going to a restaurant for dinner. Gary and Greta's entrées include soup and salad with the price of their meals. In this case, their meal is like their company's health plan - they get what they want along with a few added extras. Hopefully, their food tastes better than their health plan.
Anyway, tonight Gary and Greta want more than the basic entrée, soup and salad. They'd also like to order some appetizers, a bottle of wine and dessert. These extras are kind of like voluntary benefits - Gary and Greta get more than the basic offering, but only pay for what they order.
Like appetizers, desserts and wines, voluntary benefits come in many varieties that help protect your financial and physical well-being.
For example, for a little extra money that's simply deducted from his paycheck each month, Gary can purchase disability insurance that will help offset loss of income if he is unable to work due to sickness or injury. He can choose supplemental insurance to cover copays, deductibles or other costs of care not covered by his regular health insurance. And benefits are paid directly to the employee, so Gary can use the money however he needs to.
Most consumers don't plan for loss of income, or for expenses like childcare and travel that are necessitated by illness or injuries but not covered by medical insurance. Yet studies show that unexpected illness and injuries account for more than 350,000 bankruptcies every year. By enrolling in these voluntary benefits, Gary is rewarded with greater peace of mind. As an added bonus, the premiums Gary pays for voluntary benefits are paid using pre-tax dollars.
Voluntary benefits may also include options like vision and dental insurance, which can protect more than your eyes and teeth. Annual eye exams, for example, can help detect health problems like diabetes and high blood pressure. And did you know that gum disease is a serious risk factor for heart disease? Keeping your teeth and gums in good shape helps protect your overall health.
Now, what are the advantages for employers who offer voluntary benefits?
Offering voluntary benefits to employees provides a great incentive for people to stay with your company. Your employees can receive more benefits - and you don't pay any extra. You're also helping your employees protect their health, their savings and everything they've worked so hard to achieve. As an added bonus, offering voluntary benefits provides the opportunity to lower your payroll taxes with each enrolled employee.
Summary of Voluntary Benefits
Voluntary benefits allow employees to purchase additional insurance products through their company at rates that are lower than if they bought them on their own. Premiums are paid from pre-tax dollars and deducted from the employee's paycheck, making payment simple and convenient.
Voluntary benefits are also a way for employers to offer an added incentive to employees without having to pay extra. Everybody wins when voluntary benefits are a part of a company's employee benefits package.