Use Voluntary Benefits to Offset Negative Reaction to Benefits Cutbacks
All successful companies face the challenge of attracting and retaining the best employees. Even in an economy with widespread workforce reductions and a job market that favors employers, salary freezes, bonus eliminations and benefits cutbacks make it more difficult to motivate employees and maintain their loyalty. Though disgruntled employees may stay on board for as long as tough economic times persist, when conditions improve they’ll begin to get their resumes in order and explore other opportunities. That’s one reason why it’s important to maintain a competitive benefits package, even during times when employees aren’t actively looking for new employment.
However, with employers feeling the economic pinch as much as employees, funding a comprehensive benefits program might not be within all companies’ budgets. When the economy forces benefits cutbacks, voluntary benefits can play an important role in filling gaps and helping a company maintain competitive benefits offerings.
Suppose, for example, rising health plan costs force you to choose between allocating limited benefits budget dollars to the health and dental plans along with a significant cost increase to employees, or directing all of these dollars to the health plan and eliminating the dental plan. A voluntary benefits program gives you another option: Continuing to offer employees access to a dental plan, but on a voluntary basis. Employees will pay the full premium, but at a discounted rate since the plan is offered on a group basis. They also have the convenience of payroll deduction, and the option to pay premiums pre-tax, a money-saving measure that would not be available to them if they’d had to purchase the coverage on their own. The group pricing and tax-savings potential give employees access to benefits coverage that they otherwise may not have been able to afford.
Whether the pre-tax savings opportunity is available will depend on the type of voluntary benefit-for example, while dental, vision and supplemental medical premiums can be paid for with pre-tax dollars, certain types of life insurance and products like group auto insurance, group homeowners insurance and group legal cannot. But even when pre-tax payment is not available, employees will likely gain substantial savings from the discounts of group purchasing.
Along with the types of benefits mentioned above-dental, vision and supplemental medical, and group auto insurance, group homeowner’s insurance and group legal-common voluntary benefits offerings include supplemental life insurance, disability insurance, and financial planning.
In addition to filling gaps in coverage, voluntary benefits also are a great way to be responsive to the varying needs of today’s diverse workforce, and enable your company to offer employees access to an array of benefits that few employers would be able to finance on their own.
Since it’s important to offer voluntary benefits that are most likely to be well-received by employees, look both at what coverage gaps exist in your company’s core benefits program, and at employee demographics to determine which voluntary benefits offerings are most appropriate. Employee focus groups and employee surveys also can be useful information-gathering tools in selecting the voluntary benefits that would be the best fit for your workplace.
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