From pet insurance to tuition reimbursement to gym memberships, there is no shortage of benefits products for plan sponsors to offer their participants, nor a shortage of vendors wanting to sell them.

While employers want to offer a competitive suite of benefits to help attract and retain talent, limited budgets and fear of a lack of utilization come into play when making decisions about what benefits to offer.

As many companies enter into open enrollment season, it is important for plan sponsors to consider ways they can offer personalized benefits that cater to their diverse participants’ needs.

Tina Wang, division vice president of human resources at Automatic Data Processing Inc., says employees today place high value on not only pay expectations, but also the “total rewards” package, which includes traditional benefits like medical and dental insurance, as well as nontraditional benefits. In addition, Wang says employees are placing high value on job security and career progression, on top of seeking work-life balance and flexibility.

ADP’s Employee Pulse Study, which surveyed 3,000 full-time employees in April, found that across all generations, employees placed the most importance on their medical plans, followed by retirement plans and dental plans. In terms of nontraditional benefits, employees placed the highest importance on paid family and medical leave, employee training and development benefits, and mental health counseling.

Generation Z, in particular, reported placing a high value on education subsidies and tuition reimbursement benefits.

Wang says employers need to focus on making the benefits they are offering more relatable and personal to their employee base. For example, when she was entering the workforce, Wang says, she decided not to sign up for long-term disability benefits because she did not think of the possibility of getting into an accident. Disability insurance replaces one’s income if an injury or illness keeps one out of work for an extended period time. Similar to other kinds of insurance, disability insurance rates increase as one ages, so there are benefits to purchasing a policy at a younger age.

Supplemental Health Benefits

Within the realm of medical benefits and insurance, plan sponsors have the option to go beyond what is typically offered and offer benefits like accident insurance, hospital indemnity insurance and critical illness insurance, which, according to Christin Kuretich, vice president of supplemental products at Voya, are increasingly in demand.

She explains that accident insurance will cover injuries—anything from a broken ankle to a fractured hip or burns. Kuretich says that if participants have hospital indemnity insurance, any time spent in a hospital will be covered, regardless of whether it is due to injury, illness, mental health or substance use disorder.

“One of the biggest [uses] of hospital indemnity insurance is childbirth and delivery,” Kuretich says. “If you’re having a baby, you probably [will spend] two or three days in the hospital and incur a big bill afterward. This is [a benefit] that can really make sense for [those employees].”

Lastly, critical illness insurance typically provides a lump-sum payment that could cover medical bills associated with chronic conditions or illnesses. This could include treatment for heart attacks, strokes, cancer or any illness that has a debilitating impact on one’s life and ability to work.

“There’s a lot of cost involved that traditional medical insurance won’t cover,” Kuretich says. “That was sort of how this benefit category was born.”

She argues these supplemental benefits can help fill the financial gaps left when an employee decides to enroll in a high-deductible health plan, for example, in order to have lower monthly premiums and access to a health savings account.

Kuretich says these benefits are becoming extremely common among the largest employers.

“From the employer’s perspective, when they’re considering this and they’re looking at ‘What is my spend?’ … the good thing about these [benefits] being supplemental and voluntary is that they don’t cost the employer anything just to offer them,” Kuretich says. “So when we, on the carrier side, are looking for partnership or a commitment from an employer, all we’re really hoping for is: Can you endorse these benefits?”

Employers need to ensure they are properly explaining the benefits to their employees so that employees know to what they are agreeing, Kuretich says. She adds that when providing documents during open enrollment, these supplemental benefits should come after the medical benefits section and should not fall to the bottom of the list near pet or legal insurance, for instance.

Pet Benefits on the Rise

Pet insurance may not be at the top of employers’ lists, but it is certainly a benefit that has been growing in popularity, especially since the COVID-19 pandemic, when more people began working from home and adopting pets.

In a sign of this trend, the New York City Council is considering a bill that would permit employees in New York City to use paid sick leave to care for pets and service animals, just as they can to care for themselves or for family members.

Scott Taylor, president of Spot Pet Insurance, says pet insurance is similar to human health insurance in that it covers accidents and illnesses. Taylor says enrollees can select either a $2,500 annual limit or an unlimited annual coverage. Then they select their deductible, which can be anywhere between $100 to $5,500, and a reimbursement rate, which can be 70%, 80% or 90%.

Taylor says the price of the policy depends on what selections the enrollee makes, as well as the breed of the dog or cat, and the zip code.

Taylor encourages people to get pet insurance when the pet is a kitten or a puppy, so there are no pre-existing conditions and the rates are low. Taylor says he is seeing a “tremendous amount of interest” in pet insurance heading into this year’s open enrollment and has had employers signing on to offer Spot year-round. He says Spot is a direct-bill product, so it is not paid through payroll deductions. The employer gets a co-branded link from Spot and can then send it out to employees in the benefits package.

Because it is not attached to payroll, Taylor says it is easier for employees to keep the benefit when they leave their employer.

He argues that this is a “no-brainer” benefit for employers to offer, especially as he estimates 70% of employees have pets. Taylor adds that his program is a “minimal lift” for the HR benefits team, as Spot conducts training on the program and offers webinars to employees, as well as a call center.

“I think the awareness of pet insurance and the need for pet insurance is higher than it’s ever been before,” Taylor says. “People have an expectation that their pets are part of the family now, and that’s probably changed over the years. People expect the same kind of care … as they would going into a human health hospital. … There has been an inflationary rise in the cost of care that has also helped to create the need for pet insurance.”

Overall, when deciding what benefits to offer, Wang says plan sponsors need to understand the culture of their organization.

“A company can only offer what they can afford,” Wang says. “But it’s important to understand what the culture of the organization is, and that is helpful in attracting talent and [understanding] what a company values.”

For example, she says, offering an employee assistance program, which can include mental health counseling, child care assistance and tuition reimbursement, can indicate to employees that the company cares about their work-life balance. Wang adds that conducting surveys and getting consistent communication from employees also helps employers better understand workers’ needs.