Small Business

Voluntary Benefits for Small Business

Published on January 29, 2020

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When small business owners create an employee benefits package, they want to make sure that they offer benefits that their employees care about. Although group health insurance continues to be one of the most significant employee benefits, small businesses may also want to consider offering voluntary benefits to their workforce.

Voluntary benefits can help to round out a comprehensive benefits package, and may often be offered to employees at minimal cost to the business.  

Continue reading to learn more about voluntary benefits and why small business owners may find them useful in their employee recruitment and retention efforts.

What are voluntary benefits?

Voluntary benefits are insurance products and additional services offered through employers, yet are partially or completely paid for by employees through payroll deductions. Employees’ contributions to the benefits may be either pre-tax or post-tax. 

Common examples of voluntary benefits include:

Other types include hospital indemnity plans, identity theft protection, long-term care insurance, financial counseling, and pet insurance.

Why should a small business consider voluntary benefits?

Offering voluntary benefits to employees as a small business could be a strategic and affordable choice for several key reasons:

  • Low or no cost to employer – Since voluntary benefits are mainly paid for by employees, a small business may be able to offer them with less cost concerns, especially when compared to the employer contributions and cost sharing typically required by a group health plan.
  • Better rates for employees – By enrolling in a benefits program through their employer, employees can access group rates, getting lower prices than they would be able to on their own.
  • Enhance employee retention – Being able to keep valuable, key employees is a crucial concern for any small business. Offering a range of appealing and popular benefits may contribute to helping retain employees, increasing loyalty, and reducing employee turnover.
  • Strengthen recruiting program – In-demand benefits could improve the hiring and recruiting efforts of a small business by helping it stand out from competitors as an employer of choice.
  • Support financial security – Since many benefits focus on providing additional insurance coverage, they can play an important role in taking care of the long-term financial health and well-being of your employees.

Considering the potential advantages for both employers and employees, it may be worthwhile to look into how these additional benefits may be able to help your small business workforce thrive. Contact a licensed insurance broker or agent to find out more about your options.

Recent trends in employee benefits

Offering voluntary benefits may be more common than you think. According to the eHealth 2018 Small Business Health Insurance Report, 52 percent of surveyed small business owners offered a group dental plan, and 41 percent offered a group vision plan, in addition to group health insurance coverage.

Recently, more employers have started to realize the value of offering these kind of benefits. According to findings from a Willis Towers Watson 2018 survey:

  • Only 5 percent of respondents said that voluntary benefits will have little importance to their employee value proposition and rewards strategy. This is a significant change compared to five years ago, when 41 percent of employers said these benefits would have little importance.
  • Over two-thirds of employers (69 percent) said that voluntary benefits will be a very or more important part of their employee value proposition in three to five years, which was nearly double the percentage of employers (36 percent) who currently feel this way.

Overall, the survey findings demonstrate how additional benefits have become an increasingly relevant consideration for employers seeking to complement their employee compensation packages.

Although a small business is not required to offer voluntary benefits to its workers, doing so could be an effective way to retain and recruit employees by providing more comprehensive coverage and support.

To learn more about small business group dental and vision plans for employees and business owners, visit eHealth.com today or speak with one of our licensed health insurance agents.

This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.

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