Pros and Cons of Voluntary Benefits

Putting in place a voluntary benefits program at your organization allows your people to figure out and sign on for benefits that work for them, and then supplement those choices with your standard benefits package with offerings that pertain to their specific circumstances. Moreover, you can offer such perquisites for little to zero impact on your revenue stream.

With that in mind, here are the pros and cons of voluntary benefits – and more.

Just What are Voluntary Benefits?

Also called employee-paid benefits or supplemental insurance, voluntary benefits are services offered by organizations to their employees, who can take advantage of them at lower costs. The benefits don’t directly affect employers, cost-wise.

Employees pay for these benefits through payroll deductions, which in some instances can reduce tax liabilities. Employees can pay for some voluntary benefits packages with pre-tax dollars, including 401(k) contributions.

What Kinds of Voluntary Benefits are Offered?

Programs typically encompass lifestyle, health, security, financial, and personal benefits. Note that there are other types of voluntary benefits available for direct savings to your employees. 

Lifestyle-related offerings typically include services such as, say, fitness club memberships or the retention of legal counsel for personal situations. 

Health benefits include accident coverage, long-term care insurance, ambulance and emergency transportation, disability insurance, and access to telehealth. Dental coverage incorporates sealants, tooth extraction, crowns, dentures, and tooth extractions. Vision plans cover eyeglass prescriptions, Lasik procedures, and contact lenses.

Security comprises coverage such as theft insurance and life insurance policies.

Financial programs can include financial planning, tax assistance, investment advice, retirement plans, and student loan repayment programs.

Personal benefits incorporate flexible scheduling, remote work opportunities, pet insurance, and travel insurance. 

Pros of Voluntary Benefits

  • Ease financial risks. Without the options afforded by voluntary benefits, it would be very difficult and quite pricey to provide such services with traditional benefits programs.
  • More personalized choices. In a tight labor market, which is what we have now, it’s important for employers to do all they can to attract new talent and keep the people they have. The ability to pick and choose what’s needed in a benefits plan will likely help. People want what will help them.
  • Competitive edge. As we say, such benefits can keep the people you desire for your organization from being poached by rivals, because they promote loyalty and a commitment to your organizational goals.
  • Employees pay less overall. They’ll pay less for services selected through the voluntary program than they would get them on their own. Employees also may benefit from tax reductions.
  • Already vetted. You needn’t worry about confidence or veracity with these in-program providers since they’ll come already scrutinized. That also makes them safer choices for your people.

Cons of Voluntary Benefits

  • Potential confusion regarding new offerings. Even with all the advantages, you should communicate with your employees before putting such a plan in place. 
  • Education. You’re going to have to spend time educating your people about your new offerings. Some businesses may consider this a disadvantage.
  • Offering too many benefits can be confusing. While it may be tempting to throw everything into the mix, an overabundance of offerings could lead to decision paralysis. So, if you offer such benefits, invest time during open enrollment discussing them. 

In summary, yes, there are pros and cons with voluntary benefits, as there are with most anything. The reality, though, is that such benefits are more important than ever, and are increasingly a part of the most comprehensive benefits packages. Employees reap savings and get more of what they want, and such programs lessen financial risk. There are good reasons why 90 percent of employers have already made voluntary benefits part of their overall strategy.

We recommend that you go through Mercer for your voluntary benefits program – and to ultimately enhance your investment in your employees.



Helen is a multi-published, award-winning author of over 30 books, including the delightful Ivy & Bean series. She has written novels for young adults, including YA romantic comedies, and has written BBC drama.

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