Answer to Question #274562 in Management for jean

Question

To become more successful, should companies

provide additional voluntary benefits on top of government-mandated ones?

Justify your answer.

Answer 1

Discussion

Voluntary benefits are services and/or goods that an employer offers at a discounted group rate but are paid for (either fully or partially) by an employee through a payroll deduction.Voluntary benefits are supplemental to other traditional benefits (health insurance, retirement, etc.) and don’t have any direct costs to the employer. Yes, to become more successful, companies should provide additional voluntary benefits on top of government-mandated ones. Voluntary benefits are increasingly an important part of employee benefit packages. With employer benefits making up almost 1/3 of total compensation costs, organizations are turning to voluntary benefits as part of the total employee benefits package. The flexibility and wide range of options makes them attractive to employees. Plus, they can be tailored to meet the employee’s specific needs. Examples of popular voluntary benefits include; Term life insurance, Dental insurance, Critical illness insurance, Accident insurance etc. Voluntary benefits are good for employers, too. Below are some reasons for employers to offer voluntary benefits as part of their total compensation package;

• Although employees pay for these benefits themselves, they are still a benefit because the employees receive lower group rates and a guarantee issue (everyone qualifies regardless of health).
• Employees can purchase voluntary health benefits such as critical illness and hospital indemnity plans. These can offset the costs of a hospitalization or major health event, bridging the high-deductible medical insurance gap.
• During these times of low unemployment, competition to hire and keep the best employees is fierce. Voluntary benefits boost the overall benefits package with options that can help employers keep current employees happy and attract new ones. Choices and options enable employees to tailor a benefits package that meets their specific needs.
• For some employees, individual short and long term disability, life, and long term care insurance can be out of reach. Premiums on individual policies can be high. Additionally, some employees may have pre-existing health conditions that prevent them from qualifying for individual income protection. Group disability, life, and long term care benefits are a guaranteed issue in many cases and come with lower group premiums. Employees gain peace of mind knowing they are protected, and they appreciate that their employers offer benefits that protect their financial welfare.
• Voluntary benefits are optional. This choice allows employees to pick and choose the benefits that they want, rather than their employer picking for them. They give employees a level of autonomy in their overall benefits plan. Furthermore, employees get to decide what combination of benefits works best for themselves and their families. Voluntary benefits add a lot of value for employees and employers. They allow employers to offer options to employees that fill the gaps in the organization’s employee benefits plan.

Reference

Nugent, A. J. (2009). Using voluntary benefits strategically can help employers address goals of retaining employees and controlling costs. Benefits Quarterly, 25(2), 7.