Employers have long included voluntary benefits as part of their ancillary benefit packages. Voluntary benefits are administered by the employer and paid for by the workers, who in turn receive group rates or discounted services. An effective voluntary benefit plan can serve as a cost-effective method to attract and retain high-quality workers while limiting distraction and increasing worker productivity. The International Foundation’s 2020 Employee Benefits Survey provides benchmarking data on a wide variety of voluntary offerings, including life insurance, accident insurance, vision insurance, short- and long-term disability benefits, and more.
As of 2020, about nine in ten (87%) offered at least one voluntary benefit, a slight increase from the 2018 iteration of the study (85%). In addition, larger employers (those with 500 or more workers) are more likely to offer at least one voluntary benefit (96%) compared to smaller organizations (76%).
Following is a list of some of the most prevalent voluntary offerings as well as their impact on certain benefit success measures.
Life Insurance Benefits
- The most offered voluntary benefit is life insurance (67%), either for the worker or dependents (67%), a slight increase from the 2018 edition of the survey (59%).
- A further data breakdown shows that large employers (77%) are more likely to offer life insurance than smaller employers (53%).
- More than one-half (52%) of responding organizations offer accident insurance as a voluntary benefit.
- This offering, which protects against loss by accidental bodily injury, has seen an uptick in prevalence since 2018 (43%) and is more commonly offered among larger organizations (63%) compared to smaller ones (41%).
Critical Illness Insurance
- With critical illness insurance, an insurer agrees to pay if the policyholder is diagnosed with a specific condition such as cancer, heart attack, stroke, Alzheimer’s disease, kidney failure, organ transplant or disability. Payment is typically a lump-sum cash amount stated in the policy.
- One-half (50%) of responding organizations offer critical illness insurance as a voluntary benefit, an increase from 2018 (40%).
- Like previous offerings, larger organizations (60%) are more likely than their smaller counterparts (40%) to provide this benefit.
- Interestingly, responding organizations from the South (63%) are more likely to offer critical illness insurance as a voluntary benefit than other areas of the country.
- Vision insurance typically entails coverage for glasses, contact lenses and preventive screenings. Less than half (45%) of responding organizations offer vision insurance on a voluntary basis, while 64% offer it as an employer-paid benefit.
- Larger organizations (54%) are more likely than smaller organizations (35%) to offer vision insurance on a voluntary basis.
- About three in ten responding organizations offer long- (29%) and short-term (29%) disability coverage as a voluntary benefit. This coverage entails periodic payments when a person is unable to perform the duties of their occupation due to illness, injury or disease.
- Larger organizations are more likely to offer long-term disability coverage as a voluntary benefit, while both offerings are more commonly offered as standard, employer-paid benefits.
Legal Services Plan
- The same proportion (29%) offer legal services plans as a voluntary, “worker-pay-all” offering. These plans typically provide convenient and affordable legal assistance for services such as legal advice, drafting of wills and house closings.
- Larger organizations (39%) are far more likely than smaller (14%) to offer a legal services plan as a voluntary benefit.
- Geographically, organizations located in the West (35%) are more likely than other areas of the country to offer a legal services plan.
- Employers are increasingly looking at identity-theft insurance protection as an important line of defense against potential security data breaches. Identity-theft insurance can cover access to identity theft counselors, monitoring tools/alerts, stolen fund reimbursement and even expense reimbursement such as legal fees or lost wages.
- Similar proportions offer this benefit as a voluntary (25%) or standard, employer-paid offering (25%), with both offerings seeing substantial growth over the past two years.
- Like other voluntary offerings, larger organizations (32%) are more likely than smaller ones (17%) to offer identity-theft insurance on a voluntary basis.
Hospital Indemnity Insurance
- One in four responding organizations (25%) offers hospital indemnity insurance as a voluntary benefit offering. During hospitalization, this supplementary insurance pays for benefits that may not be covered by standard health insurance. This typically entails payments for hospital admissions, copays, deductibles and inpatient rehabilitation expenses.
- About one in four organizations offers pet insurance as a voluntary benefit (24%), an increase from 2018 prevalence (16%). These plans provide coverage for routine veterinary visits for things like checkups and vaccinations as well as coverage for potential accidents.
- Unsurprisingly, larger organizations are more likely to offer pet insurance than their smaller counterparts (32% compared to 15%).
- In addition, pet insurance benefits are most commonly offered among respondents in the West (37%) compared to other parts of the country. These benefits may continue to rise in popularity as organizations implement more flexible working arrangements.
- While far more commonly offered as an employer-paid benefit, about one in five responding organizations offers dental insurance (19%) as a voluntary benefit.
Long-Term Care Insurance
- One in six responding organizations (16%) offers long-term care insurance as a voluntary benefit. This insurance covers the costs associated with long-term care at home or in a residential facility for those who are unable to care for themselves.
- About one in ten (9%) offer long-term care insurance as an employer-paid benefit.
[Related Reading: Innovative Benefit Offerings on the Rise—Employee Benefits Survey Results]
The Role of Voluntary Benefits in Success Measures
Respondents to the Employee Benefits Survey were also asked a series of questions about the success of their benefit offerings. In examining the discrepancies between “successful” and “unsuccessful” organizations, we can identify which voluntary benefit offerings may most effectively drive these measures.
Supplementary Benefits Satisfaction
- Responding organizations that felt that their workers were satisfied with their supplemental benefit offerings were more likely to offer at least one (88%) voluntary benefit compared to their “unsatisfied” counterparts (77%).
- The largest discrepancy exists in short-term disability benefits, where “satisfied” workforces (29%) were more likely than their “unsatisfied” counterparts (15%) to offer this coverage.
Ability to Attract and Retain Workers
- Organizations that stated that they were successful in their attraction and retention efforts were more likely to offer a variety of voluntary benefits including identity theft insurance (28% compared to 14%) and access to legal services plans (30% compared to 19%).
Impact of Engagement and Productivity
- Respondents were also asked to rate their benefit offerings in relation to spurring worker engagement and productivity. Organizations that are successful at doing so are more likely to offer identity-theft insurance (27% compared to 13%) and pet insurance (25% compared to 14%).
Employee Benefits Survey 2020 is the seventh comprehensive benefits benchmarking survey conducted by the International Foundation of Employee Benefit Plans. The report covers pension and retirement benefits, health care benefits, voluntary benefits, paid leave, work/life benefits and more. The full report is available at www.ifebp.org/BenefitsSurvey2020.
Justin Held, CEBS
Senior Research Analyst at the International Foundation
The latest from Word on Benefits:
- New Mental Health Parity Guidance: More Clarity, But More Compliance Obligations
- Legal & Legislative Reporter: Medical Provider May Not Bring Claim on Behalf of Participants and Beneficiaries
- Five Steps to Nurture Belonging in the Workplace
- Navigating Uncertainty
- DOL Guidance on Mental Health Parity: Proposed Rules for NQTL Comparative Analyses