Plan Designs - Voluntary Benefits
As health care costs continue to rise, so has the demand for voluntary benefits. Since many employers find it increasingly difficult to provide employees with a complete benefit package, voluntary benefits have become an ideal solution. Voluntary benefits allow employers to offer benefits that are attractive to employees without added cost to the company. Employees benefit because they have a variety of insurance options available conveniently in one place, and often with lower premiums than individual policies they would have bought themselves.
What are voluntary benefits?
Voluntary benefits are coverages and products made available to employees for elective purchase. These programs have four key characteristics:
Because of their cost efficiency and portability, as well as their contribution to an employee's work - life balance, voluntary benefits are becoming a central component of many companies' overall benefits strategies.
What are some common voluntary benefits?
.Permanent life insurance
.Disability income insurance
.Accidental death and dismemberment (AD&D)
.Supplemental health insurance
.Long - term care insurance
.Retiree medical insurance
.Prepaid legal services
.Pet health insurance
.Identity theft insurance
.Computer purchase programs
Why should employers consider expanding their benefit offerings to include voluntary benefits?
What are some specific advantages to offering voluntary benefits?
Voluntary benefits appeal to both employer and employee needs.
What process should employers follow when expanding their non-traditional voluntary benefit packages?
Employers wishing to roll out new voluntary benefits must show their support for these products in order for them to take off with employees. Showing support motivates workers to take notice and see the value for themselves and their families.
Are there any fiduciary responsibilities associated with offering voluntary benefits?
Although most employers do not contribute to the cost of this coverage, they still have a fiduciary responsibility under ERISA to police such plans if they engage in the promotion or distribution of benefits information related to these programs or allow payroll-deducted payment on a pretax basis through a Section 125 cafeteria-style plan.
How are voluntary benefits administered?
As the number of available voluntary benefits increases, proportionally more time and resources are required to communicate, administer and manage such programs. Even turn-key products, such as discounts, can be administratively challenging when there are numerous benefits.
To ease this burden, employers can outsource their voluntary benefit and/or discount programs to third party administrators, automated platforms or service providers. These service providers typically charge a per-employee fee for managing the corporate discount program(s).
Consultants have extensive training in all areas of voluntary benefits and offer valuable resources. They can assist employers in negotiating more favorable benefit and cost terms with insurance carriers and enrollment firms, along with supporting the program once it is in place.
Most employers try to avoid paying third party management charges, but these fees may be more affordable than the cost of internally managing the program, and they often yield a more robust program in terms of access, product variety and control.
How are voluntary benefit outcomes measured?
To ensure that voluntary benefits programs are as competitive and effective as possible, employers should measure the success of the programs every 12 to 24 months. Employers can conduct surveys to test employee awareness of, understanding of and satisfaction with the voluntary benefits programs. Companies can also benchmark their portfolios of voluntary benefits against those offered by industry peers. Finally, employers can examine participation rates among employees to determine if they are at, above or below industry norms with regard to re - enrollment and persistency.
Voluntary Benefits may not be the right solution for all employers or individuals. Please contact your ThinkTank Insurance Partners representative for assistance in determining if and what type of voluntary benefit plan designs are right for you.
This copy of ThinkTank Insurance Partners Plan Designs is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
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