Employers’ goals for voluntary benefits —increasingly a core component of any employer’s benefit package that allows employees to self-select from a menu of offerings, typically at reduced or increasingly no cost — have expanded dramatically since 2020.
According to Buck’s 2022 Wellbeing and Voluntary Benefits Survey, half of all employers (52%) have added offerings in the last two years as an affordable way to address diverse needs, reward employees and foster increased job satisfaction and engagement. More significantly, many employers (72%) plan to expand their voluntary benefits offerings.
Investing in these programs is not misplaced. The research was supplemented with feedback from employees who agree that voluntary benefits are an essential part of their benefits package and offer better value than buying similar services privately. The search for better benefits is also a key driver for the 35% of employees who are actively looking for a new job – and that number rises to 44% for millennials, the largest generation in the workforce.
Role of voluntary benefits in developing a wellbeing strategy
Businesses have long used voluntary benefits to support workforce wellbeing, prioritizing offerings that support employee physical, financial, and emotional health—a trend that started even before the pandemic outbreak. The average employer now offers 12 or more programs and 97% of employers offer at least one voluntary benefit, compared to 88% doing so in 2020.
Both employers and employees agree there needs to be a more holistic approach to improve wellbeing is needed. But our findings also show less than a third of employees view existing employer resources as helpful in meeting their top three priorities: Saving money, supporting financial wellbeing, and improving mental health. When offered options specific to the first two needs, employees prioritized additional support in the form of financial coaching and building emergency savings.
Progressive employers are taking steps to implement real solutions that reduce costs or can help pay for unexpected costs like medical bills – putting money in employee pockets and providing better alternatives to address financial stress than employees could secure on their own. Voluntary benefits like emergency savings, personal loans, credit improvement, college savings, supplemental medical and long-term care have been some of the fastest growing benefits over the past two years. Perhaps more importantly (and not a surprise), employees ranked these toward the top of the list in terms of benefits they would like their employer to offer.
Designing a voluntary benefits strategy that adds value
Our research shows that employer voluntary benefit offerings are still somewhat at odds with what employees want. The key takeaway here is that if employers want to grow and thrive in the decades to come, they need to recognize that recruiting and retaining talent will be significantly more challenging if they don’t take meaningful steps to understand the needs of their workforce. Analyzing your workforce demographics, can help.
- Workers under the age of 40 place higher priority on day-to-day savings and family building benefits
- Employees under age 25 are more likely to want assistance with mental health issues, including coping with unstable home environment, negative emotions, and addiction/substance abuse
- Lower income employees (<$50K) want more support with budgeting, debt reduction/improving credit, and emergency savings
- Those ages 41-56 are 39% more likely to value long-term care readiness
Educate your employees about their benefits
As voluntary benefits play a larger role in the employee value proposition, tangibly demonstrating a company’s commitment to supporting the diverse needs of their workforce, it’s important that businesses develop a robust communications strategy. Employees need a better understanding and ability to take advantage of available resources.
The survey shows that 45% of employees wish they had a better understanding of their benefits—and the number is higher for younger employees. Results confirm that personalized communication and the right decision support tools can help. Employers also are increasingly using core annual enrollment to help employees gain the knowledge and confidence they need to use the benefits to improve their personal wellbeing. But ongoing, year-round communications are important, given many options can be utilized at any point in the year, as needs arise.
Voluntary benefits are essential
Employer benefit offerings—including voluntary benefits—play a central role in supporting wellbeing, and the perception among employees of their company’s commitment to that wellbeing. The challenge for employers now is to really understand the needs of the workforce, develop a benefit package including appropriate voluntary options that addresses those diverse needs from the employee’s vantage point, and then communicate the programs effectively.
This couldn’t be more critical at a time when employers face a growing talent deficit and need to find effective ways to retain good people. Nearly 70% of employees agree that voluntary benefits are an essential part of a comprehensive benefits package. These offerings demonstrate an employer’s commitment to supporting diverse employee needs for wellbeing.
Voluntary benefit offerings may represent low-hanging fruit for employers trying to convince workers to stay and help attract candidates looking for something better.
Tom Kelly is a Principal in the Health practice at Buck, an integrated HR, pensions, and benefits consulting, technology, and administration services firm.
Buck’s third biennial Wellbeing and Voluntary Benefits Survey explores employee wellbeing and how U.S. employers rate the financial, social, physical, and mental health of their workforce. The report also offers insight into how organizations are using voluntary benefits to support employee wellbeing, enhance benefit programs, and attract and retain talent. Click here to download a copy of the executive summary.