Small business owners wear many hats and simply finding the time to research and manage employee benefits isn’t easy. So it’s not surprising that small business employers aren’t exactly tuned into the insurance needs of their employees or are even familiar with the benefits that they could offer outside core health insurance.
For example, when surveyed by insurance carrier Colonial Life, 47% of small business employees responded that they value non-medical insurance benefits almost twice as much as their employers believe they do. And 40-49% of small business employees are interested in purchasing additional insurance benefits, such as life, disability, and critical illness if they have access.
Clearly, there’s a huge gap between what employers think and what employees value.
So how do small business employers go about attracting and retaining talent if their benefit packages are apparently short of employee expectations and needs?
This is where voluntary benefits can help. Let’s explore what voluntary benefits are and how they work:
What are Voluntary Benefits?
Voluntary benefits allow employers and employees to fill the gaps they have in their existing benefits packages – and include options for life insurance, short-term disability, and so on.
Employees can buy these insurance products through their employers at a lower rate than they could get on their own – at no cost to the employer. Employees also gain the flexibility of picking and choosing the benefits they want based on their needs and budget.
Products range from identity theft coverage to pet insurance, although most are designed to address critical life needs and provide a financial safety net – popular benefits include short-term disability, accidental coverage, and life insurance.
Many of these benefits can be also help reduce payroll taxes.
NOTE: Primary health care insurance is NOT a voluntary benefit. Employees can use the government’s SHOP Marketplace to find low-cost health insurance coverage for employees. Voluntary benefits are instead offered as an option to help employees provide more robust and attractive benefits packages, over and above traditional healthcare plans.
How Can Voluntary Benefits Help?
Group rates, payroll deduction, and potential portability make voluntary benefits affordable and attractive to employers and their workers alike. They also give employers an opportunity to strengthen existing benefit packages at little or no extra cost while reducing the high out-of-pocket costs of providing regular or group plans.
Another bonus for employers is convenience. Insurance carriers can take the burden of employee education (counseling sessions that help employees make informed decisions about the right plans for their needs), enrollment and administration off the employer’s plate.
What do Voluntary Benefits Cost Employers?
Voluntary benefits are usually employee paid. There is no cost to the employer.
Here’s how it works. As a small business owner, you provide a direct conduit between an insurance carrier and your employees. You already know your employees are interested in beefing up their existing benefits package; the carrier simply steps in and takes it from there. Interested employees spend time with the carrier’s benefits counselor to review their current coverage and their future needs (and potentially purchase a plan) – at no cost to you.
Insurance providers may also ask that you keep an eye on the needs of employees over time and gauge where there are gaps in coverage so that they can propose plans that might fit.
What to Look for in a Voluntary Benefits Partner
Putting something as important as benefits administration and the goodwill and hard-earned money of your employees in the rights hands requires a partnership. Look for a provider who has experience working with small businesses – there’s a world of difference between a company with 10, 20 or 50 employees than one with 500. Also, consider a provider who knows your industry or works with similar small businesses.
Ask about their approach. Will they take time to learn your benefits communication and enrollment goals? How closely will they work with you to deliver on employee education promises and plan administration tasks? In a nutshell, they should be able to demonstrate how they’re going to make your life easier. All these services, the initial consultation, should be offered at no cost.
You also want to check that they can dig into employee and dependent information to confirm eligibility for the types of benefits you want to offer before you sign up for them.
Finally, check to see whether they offer a full portfolio of offerings. Right now you might only be interested in life insurance but down the line you may want to add short-term disability or other benefits.
How do Voluntary Benefits fit in with the Affordable Care Act?
Voluntary benefits fall outside the scope of the ACA (aka Obamacare). Instead, they are private products offered directly by insurance carriers and aren’t available for purchase on Healthcare Exchanges or SHOP.
To learn more about voluntary benefits, check out this on-demand webinar from Colonial Life in partnership with the SBA.
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