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Thinking Outside the Voluntary Benefits Box
Customized voluntary benefits programs shouldn't overwhelm employees with choices

By Joanne Sammer  5/14/2014
 

When employers want to customize their voluntary benefits program, they have plenty of options. The list can include anything from employer-negotiated banking fees and travel insurance to a dry cleaning pick-up and drop-off service and discounted days at amusement parks.

Like any benefits program, voluntary benefits’ primary purpose is to help employers attract and retain a talented workforce. “These unique benefits can be intriguing to a potential new hire,” said Lisa Brown Morton, CEO of consulting firm Nonprofit HR. “To be competitive employers are consistently trying to ‘one up’ their competition. If you have very specialized employees with unique skills, you have to find creative ways to attract and retain them.”

Voluntary benefits, if chosen well, can also help organizations build their brands as employers. “Nowadays, especially with the use of social media, the brand equity that an employer has depends on how employees feel about the organization,” said Jim Gallic, director of health and productivity at Buck Consultants. “By providing unique benefits that employees could not get from other employers, organizations can build an employer-of-choice culture.”

There are many ways in which voluntary benefits can help do this. For example, pet insurance can be a particularly valued benefit for employees, particularly older workers. “These individuals really care about their pets so they are willing to forgo coverage or even care for themselves while their pets are being taken care of,” said Gallic. When employers offer this type of benefit, it can generate a lot of good will.

Addressing Root Causes

While there are plenty of options available to build a unique and customized voluntary benefits program, it is important not to overwhelm employees with choices. After all, there are only so many dollars available for employees to spend. It is important that available voluntary benefits address an existing need, rather than just adding novelty to what is being offered.

To determine what unique voluntary benefits would best meet employee needs, HR executives have a couple of options. The most obvious step is to ask employees what they want. Another approach is to consider potential trouble spots for employees and identify what, if any, voluntary benefits might help address those problem areas.

Nonretirement savings programs. For example, if a large number of workers are taking out loans against their 401(k) plan balances or if there has been a recent surge in 401(k) loans or hardship withdrawals, that could indicate employees are experiencing financial difficulties. To address this problem, an employer with a large proportion of middle-income employees might offer a voluntary payroll deduction savings program that allows workers to pay for unplanned expenses, such as new appliances or a major car repair, through paycheck deductions.

Such a program may provide an online portal through which the employee can set up the transaction using a curated list of financial service providers such as banks, or directly with retail merchants that offer layaway programs or holiday club accounts. The vendor then implements the payroll deduction with the employer.

“This type of program gives employees peace of mind,” said Gallic. “They can stay focused on their work, knowing that they have an avenue to cover unexpected expenses if they need it.”

In addition to giving employees a way to avoid borrowing against their retirement assets, having such a program in place could also reduce the number of employees who have to rely on payday loans and other expensive forms of short-term financing. In addition, because so many of these types of expenses, particularly car repairs, directly impact employees’ attendance and punctuality, the company can also benefit in the long run.

Care advisory services. Another benefit that could address a root cause of employee distraction and absenteeism is a program to help manage the health and well being of elderly parents and other relatives—or to help employees manage their own health issues.

If employees are taking time off or using work time to deal with these health care issues and all of the paperwork that goes with them, an appropriate voluntary benefit solution could be access to a provider that helps employees deal with the details and decisions associated with accessing the best available health care. For example, private health advisory firms offer programs to facilitate hospital stays and manage the coordination of benefits and care among a range of providers and medical practices.

Achieving Critical Mass

Offering these types of benefits depends on an employer’s ability to find the right vendors to provide them. This can be problematic for smaller employers. “Some vendors will not work with small employers that lack the volume to make it worth the time or expense to provide the benefit,” said Morton. For example, some prepaid legal plans or fitness centers require a certain level of participation that can be difficult for small employers to meet. Even some midsize or larger employers may not be able to guarantee a minimum level of participation for certain benefits using location-specific providers.

Private Exchange Options

As private health insurance exchanges become more prevalent and competitive, more of them are including voluntary health offerings, including exchange-based dental, vision and supplemental disability income insurance, as well as critical illness benefits.

If an employer, particularly a smaller one, is using a private exchange to administer overall health benefits, it can also look into using the exchange for voluntary benefits. After all, when working with a private exchange, an employer’s size does not matter because any vendor is serving all of the exchange’s participants, giving it access to many more potential customers than a single employer could provide on its own.

A private exchange should also be conducting due diligence to ensure that those providers offering voluntary benefits “are financially stable, the products they are offering will truly create a benefit for employees and that it aligns with the overall cultural message that plan sponsors are looking for,” said Gallic.

Build It So They Will Come

The key to a successful voluntary benefits strategy is to keep it current. “Having a flexible voluntary benefits strategy means listening to the needs of the employees now while also looking ahead to future needs,” said Gallic. As the workforce evolves and changes, employers will need to make sure these programs are still relevant.

Joanne Sammer is a New Jersey-based business and financial writer.

Also see:
HR Gets Strategic about Voluntary Benefits, HR Magazine, June 2014


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