SURVEY SAYS: Voluntary Benefits and Financial Wellness

Last week, I asked NewsDash readers, “What voluntary benefits do you offer employees, and do you consider these benefits a way to help employees with financial wellness?”

The majority of respondents (84.6%) work in a plan sponsor role, 7.7% are advisers/consultants, 5.1% are TPAs/recordkeepers/investment managers and 2.6% are CPAs.

Nearly all responding readers’ companies (94.9%) offer life insurance, and a large majority offer AD&D insurance (89.7%) and short- and/or long-term disability benefits (84.6%). Less common benefits offered are long-term care insurance (23.1%), pet insurance (20.5%), legal assistance (30.8%), a discount shopping program (25.6%) and auto insurance (17.9%).

Other voluntary benefits respondents reported their company offers include dental and vision plans, critical illness and hospital indemnity insurance, identity theft protection, employer assistance programs (EAPs) and flexible spending accounts (FSAs).

Seven in 10 responding readers (71.8%) consider voluntary benefits a way to help employees with financial wellness, while 28.2% do not.

In comments left by readers, there was a split between those who thought voluntary benefits were a good thing and those who thought they were not. Respondents pointed out considerations for offering voluntary benefits that plan sponsors may not think about. A couple said employees would be better off building an emergency savings fund. Editor’s Choice goes to the reader who said: “Offering voluntary benefits is important but providing employees the tools to change their behavior and improve their financial well-being can be more impactful.”

A big thank you to everyone who participated in the survey!

Verbatim

The voluntary benefits we offer (Life Insurance and AD&D insurance) are 100% paid for by our company.

We are considering Legal Assistance and Identity Theft protection.

Voluntary benefits have their place, but they must be approached with caution. Often, the premiums seem very low, which can be a red flag indicating scant benefits. The benefits are marketed as a good value when, in fact, employees may be better off putting money in an emergency or rainy-day fund. Some brokers have pushed voluntary benefits hard, without clearly disclosing that they may qualify for volume discounts if they can hit certain sales targets. Finally, some employers offer “voluntary” benefits, thinking they qualify for the ERISA safe harbor, but they also want employees to give them credit for providing a benefit. So, the employer ends up endorsing the voluntary benefit, inadvertently taking them outside the safe harbor. Bottom line: voluntary benefits have their place but need to be approached with caution.

The higher paid the employee, the better these programs tend to work. For lower paid it is much more difficult.

Most people over-insure. Their financial fitness would be enhanced if they diverted money from these high commission products to an emergency fund and long-term savings.

We view our voluntary benefit plans as added flexibility and options for our employees to make their own choices for their own needs. They add support to the core benefits and financial needs of the employee. We view them as a part of our financial wellness package in the sense that they help to fulfill some financial gaps or concerns employees may have for their current and future needs.

Most Americans need basic financial education to ensure their own financial wellness. Disability and retirement plans are key — but employers really can’t force a person to have a savings account.

I think they are a waste of money, but employees seem to like them.

If structured properly, employee benefit packages can not only increase the financial wellness, but provide crucial health benefits as well (like EAP and on call nurse)

It’s an added bonus to our employees. We are a very small company and this type of benefits helps us to offer something more.

Voluntary Benefits are a hassle and a waste of time. Most of these products are available on the open market. Even if employers do not pay premiums, we spend a lot of time reconciling billing statements, sending payments, etc. – and that all costs money. Where is it written that employers have to offer every program under the sun?

Depending on the policy chosen they can allow an employee to choose one of our health care options that costs them a lot less.

I wish everyone would take more of an interest in their financial wellness.

It is a balancing act between offering benefits that can truly help employees and offering benefits that employees sign up for whether they need them or not. We find that the lowest paid employees tend to sign up for any benefits offered even if they cannot afford to pay for them.

The benefits are awesome but it’s getting employees to understand the value – that’s the challenge.

Most are a waste of time and money but are being marketed in ways that employees are asking for them and they need to be offered for benefit packages to be considered competitive.

By offering such benefits as short term disability insurance, employees can purchase coverage to protect their income if they get sick or hurt. Voluntary benefits do help employees with financial wellness. But, we also promote Financial Well-Being by Dave Ramsey which teaches skills and techniques that address budgeting, cash flow management, and debt reduction, as well as investment, savings and retirement strategies. Offering voluntary benefits is important but providing employees the tools to change their behavior and improve their financial well-being can be more impactful.

Offering Long term care and critical illness can help protect other assets (like 401(k) plans) from being used before retirement. We’re also considering offering a financial wellness benefit with financial planners offering advice to employees on budgeting, saving, paying down debt, etc.

Providing employees the opportunity to purchase long-term and short-term disability plans allows them to keep their homes and pay their bills if they are hurt while off the job. Life insurance helps with their peace of mind in case something happens to them – especially if they are the main source of income to their family. Legal insurance allows them to have access to legal advice and discounted in services, which can save them money – especially in frivolous lawsuits. Auto insurance is a savings to the employee – helping them keep more money in their pocket.

Most employees would not otherwise purchase life insurance or short term disability on their own.