A growing number of U.S. employers now view voluntary benefits, once considered perks that were “nice to have,” as integral to their core employee benefits strategy.
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So finds the 2018 Emerging Trends: Voluntary Benefits and Services Survey, conducted by Willis Towers Watson, a leading global advisory, broking, and solutions company. A total of 336 U.S. employers representing more than 4.3 million employees and a wide range of industries participated in the survey in November 2017. Eighty percent of the respondents have more than 1,000 employees.
The survey shows employers are expanding their menu of voluntary benefits and services to help workers address their overall financial well-being and security.
Changing Times
“Historically, employers offered voluntary benefits to supplement their core health and retirement benefit coverage,” said Lydia Jilek, director of Voluntary Benefits at Willis Towers Watson. “Now, with an increasingly diverse workforce, employers no longer consider voluntary benefits as simply add-ons, but rather as a way to address a host of employee needs, offer choice, and allow employees to personalize their rewards.”
According to the survey, only a handful of respondents (5 percent) say voluntary benefits will have little importance to their employee value proposition and total rewards strategy. Five years ago, 41 percent of employers said voluntary benefits would have little importance. Meanwhile, more than two-thirds of employers (69 percent) believe voluntary benefits will be a very or more important component of their employee value proposition in three to five years, nearly double the percentage (36 percent) who currently feel this way.
“Voluntary benefits are evolving as they become a more important differentiator for organizations,” said Mary Tavarozzi, managing director of Health and Benefits at Willis Towers Watson. “While employers continue to embrace traditional voluntary benefits, such as life and disability coverage, they are offering benefits more often to help employees and their families with their financial issues. This should come as welcome news to employees, many of whom are seeking help from their employers to address their personal financial issues.”
New Focus
The survey identifies education benefits that address rising student loan debts and parents saving for children’s future college cost as important financial well-being benefits that are gaining traction.
According to the survey, 8 percent of employers currently offer student loan consolidation programs, which could increase to 34 percent by 2021. Similarly, 10 percent of employers offer student loan refinancing arrangements, which could increase to 35 percent by 2021. On average, more than half of all respondents offer some form of financial planning and counseling service, which could increase another 10 percent by 2021.
“Voluntary benefits remain popular among employers and employees, and for good reason. These benefits are a cost-efficient way to provide additional coverage to employees, and they can help employers attract and retain talented employees, many of whom tend to migrate to employers who offer choice and flexibility. Employees, on the other hand, see great value in voluntary benefits, which they are able to purchase through their employer at a lower group rate compared with on the individual market,” said Jilek.
Other voluntary benefits expected to attract more employer attention over the next few years include:
- Identify theft protection: 36 percent of employers currently offer – could increase to 63 percent by 2021
- Pet insurance: 34 percent of employers currently offer – could increase to 57 percent by 2021
- Long-term care insurance: 16 percent of employers currently offer – could double to 33 percent by 2021
- Critical-illness insurance: 43 percent of employers currently offer – could increase to 71 percent by 2021
- Hospital indemnity: 24 percent of employers currently offer – could more than double to 50 percent by 2021
“The good news is that improvements in enrollment technology are making it easier for employers to expand their voluntary benefit offerings—and the expanded choices are resonating. We’re seeing an increasing number of employees elect voluntary benefit products,” said Sherri Bockhorst, managing director of Benefits Delivery and Administration at Willis Towers Watson.