Voluntary Benefits Now in Vogue

by Jeff Kirke

The verdict on voluntary benefits is in they are fast becoming a sought-after commodity by the American workforce, and a familiar staple in the American workplace. According to a recent survey commissioned by the Metropolitan Life Insurance Company (MetLife), and conducted by Roper Starch Worldwide, American employees welcome voluntary benefits products at work with open arms. In fact, two thirds (66 percent) of all employees surveyed agree that it is a good idea for employers to offer extra financial products and services that employees can choose to purchase themselves.

Voluntary benefits include financial and insurance products such as life, vision, long-term care, auto and homeowner's insurance, legal plans, mutual funds, even pet insurance made available to employees on a voluntary basis either partially or 100-percent employee-paid, utilizing payroll deductions through employers.

Increasingly, employers around the country are answering the call for expanded benefits by supplementing traditional benefits like medical or dental plans paid by the employer, with a variety of voluntary benefits options.

The combination of benefits available to the employer is virtually limitless. Here's a menu of some of the voluntary benefits that employers are serving up a la carte:

? Insurance benefits: group universal life insurance, long-term care insurance, auto/homeowner's, pre-paid legal; accidental death and dismemberment; dental, vision, pet insurance, short-term disability, long-term disability, and critical illness;

? Financial security benefits: annuities, pension plans, and mutual funds;

? Concierge and convenience benefits: child care, alternative work arrangements such as flextime, telecommuting and job sharing; dry cleaning; car repair pickup and delivery; and takeout foods from company cafeterias.

More-bang-for-the-buck value and timesaving convenience are the top two advantages that today's discriminating American workers want from their employers' voluntary benefits programs.

Employees are seeking better rates or group rates -- and find that being able to pay for benefits through payroll deduction is an attractive advantage.

Employees agree that learning about new benefits products through their employer is more convenient than shopping for these products on their own. Employees also like the convenience of having their employer provide them with objective information about the products and services they offer.

Over the last decade, American workers weathered countless mergers and acquisitions, felt the pinch of downsizing, and were nicked by cutbacks in many of their basic benefits packages. Despite the constant flux in the American workplace, most employees are comfortable purchasing financial and insurance products when offered through their employers, and they welcome the opportunity. Employees trust their employer to find the best voluntary benefits products and services and employees expect to get better customer service from the provider as a result.

Today, American workers are purchasing many products through their employers and this trend toward voluntary benefits is expected to continue. The most frequently purchased voluntary benefits are: dental insurance, disability insurance, vision care insurance, life insurance, accidental death and dismemberment insurance, and mutual funds.

Employees are willing to meet their employers more than half way when it comes to picking up the tab for voluntary benefits. According to recent estimates, one in three (more than 35 percent) of employees currently pay 100 percent of the cost of at least one benefit that they receive through their employer. And more than 75 percent of employees pay some of the cost of at least one such benefit.

A voluntary benefits program is a win-win proposition for both the employee and the employer. With financial and insurance products, the employee benefits from:

? A broad array of flexible benefits to choose from including individual and family protection.

? The freedom to choose the types of coverage, amounts, and premiums that best suit his or her unique needs.

? Affordable group rates.

? Portable coverage if he or she leaves the company or retires.

? An easy application process through the employer.

? Convenient, effortless premium payments through payroll deduction.

Having the benefits premiums deducted from a paycheck has great appeal to employees especially since it means having one less check to remember to write, stamp, and mail. Payroll deduction makes good sense to employees for budgeting purposes as well. With deductions made through payroll, employees can make smaller, more affordable payments 26 to 52 times a year, instead of making one substantial payment.

For the employer, a voluntary benefits program can be just as advantageous. Employers who choose to enhance their traditional benefits program with expanded voluntary benefits can gain the upper hand over their competitors when it comes to attracting, recruiting, and retaining valued employees. Employers can also reap the rewards of improved morale and even improved productivity from employees who are more satisfied with their benefits offerings.

By offering individually designed insurance programs through a variety of voluntary benefits, the employer can often control benefits costs because many of the voluntary benefits are at least partially, if not 100-percent employee-paid. With most voluntary payroll deduction plans, the employer can offer a complete package of additional benefits at no additional cost to the company. Employers can also introduce most plans without having to enlist additional in-house administrative resources.

In addition, the adoption of a voluntary benefits plan is not generally subject to any Section 79 restrictions, ERISA reporting requirements, or discrimination testing. In some cases, it can be handled under a Section 125 Plan, which can save tax dollars for both employers and employees.

More employers are preparing to jump on the voluntary benefits bandwagon by expanding their offerings. Some of the top products that employers are considering adding to their benefits program include: long-term care insurance, vision care insurance, auto and homeowner's insurance, and pre-paid legal plans.

Many employers are also taking advantage of an integrated health care approach that simplifies benefits administration. When this approach is implemented, a single-source, third-party administrator works on behalf of the employer, servicing the company's numerous voluntary benefits plans and handling the benefit needs of the employees. The administrator maintains an independent position that allows the employer to implement best-in-class products from a wide array of carriers. The third-party administrator can maintain data management systems and also establish a single payroll interface with the employer that streamlines the premium payment process.

Employers consider outsourcing the administration on their voluntary benefits programs for many reasons: to ease annual enrollment, record keeping, and distribution of enrollment materials, plus reduce operating costs and paperwork not to mention reducing work or overwork by benefits staff members.

An added advantage of outsourcing voluntary benefits administration employees can conveniently call one toll-free customer service number, staffed by the third-party administration company, with their voluntary benefits questions. This saves time for employees as well as the employer's human resource staff members who generally spend a great deal of time fielding employees' benefits questions.

Employees and employers across America are breaking fresh ground and setting new standards with their drive for ever-improved benefits. With the choice, convenience, and value inherent in voluntary benefits, this rapidly growing market promises to offer mutually beneficial opportunities for employees and employers alike.

Jeff Kirke is a vice president at KVI/Seabury & Smith in Phoenix, Arizona. He can be reached by phone at 1-602-522-6539 or by email at jeff.kirke@kvi-ins.com.


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