Voluntary benefits add value for employers and employees.
How can employers cope with rising costs in all the benefits to their employees, and still offer an appealing benefits package to attract and retain qualified employees?
The solution is work site marketing of voluntary benefits.
Employers are eager to provide benefits to their employees, but rising medical and administrative costs often make it difficult for them to provide competitive, comprehensive benefit plans. There is a way, however, to help control employee benefits costs and offer employees a variety of coverage plans.
What Are Voluntary Benefits?
Voluntary benefits are the offering of voluntary, or employee-pay-all, products at the workplace. One of the easiest and most cost-effective ways to add value to a benefits package is to offer insurance on a voluntary basis. Voluntary programs allow employees to buy benefits such as dental, disability, vision care, catastrophic illness/accident, life and disability insurance, conveniently at work through payroll deduction at discounted group rates. In most cases, employees pay the entire premium through payroll deduction. Employees choose which insurance policies they want and often continue their coverage even after they leave their jobs. In addition, the policies are usually guaranteed renewable.
The large increase in the number of companies offering voluntary benefits is largely due to the rising costs in health insurance. Employers are offering more benefits , according to a survey by the Society for Human Resource Management, and 69 percent of voluntary benefits insurers see strong growth for voluntary programs, as indicated by a 1999 LIMRA International Inc. survey.
What Are Voluntary Benefits Designed to Do?
Voluntary benefits are not designed to take the place of major medical coverage, instead the two complement each other. Some voluntary benefits can fill in the gaps caused by increased deductibles and co-pays, as well as the out-of-pocket maximums.
Because benefits may be paid directly to the insured. participants may also use the money for extra non-medical expenses. While most major medical plans pay only 80% of the bill, people may have to travel to special treatment centers, hire home health and child care, and pay for additional medications.
Most people do not consider these costs until its too late.
A Wellness Benefit That Pays Cash
Another popular feature of many voluntary benefit plans is a Wellness Benefit that pays cash annually to each covered family member if chosen when the family member receives one of a number of screening tests. This provides an immediate useful benefit under the plan, and promotes awareness and early detection. A healthier workforce often leads to improved morale and productivity, and usually lowers your insurance costs. In many cases, a health screening can help diagnose a life-threatening illness in time for successful treatment.
Why Are Voluntary Benefits Becoming Popular?
Voluntary benefits are becoming increasingly popular for several reasons. They offer employees a valued product and expanded benefits, yet require minimal administration or cost to a company. One of the biggest incentives for employees is the ability to pay for benefits on a pre-tax basis, in most cases under Section 125 Cafeteria plans. Because premiums are paid via payroll deduction before taxes are withheld from an employees paycheck, an employee's taxable income is reduced.
Pre-taxing benefits may also reduce FICA and FUTA taxes.
Cafeteria plans are a WIN-WIN situation for employers and employees.
While people may know how financially devastating an illness or injury can be, they may not know how they can ease some of the additional costs such as deductibles and co-pays, as well as the costs for ambulance service or intensive care services.
For a complete benefits analysis contact NoCostEmployeeBenefits.
