Sales of voluntary group benefits grew at a record pace in 2023 as more employers expand their offerings and demand continues booming as employees seek out benefits that can defray costs, according to new research.

Premiums collected for employer-sponsored voluntary benefits jumped 6.7% during the year to an aggregate $9.3 billion, with all lines of coverage contributing to the growth, according to the Eastbridge Consulting Group’s annual “U.S. Voluntary/Worksite Sales Report”.

The findings underscore the value that employees place on these benefits, particularly in defraying health care-related costs.

According to the report, in 2023:

• Group term life insurance premiums increased 10% from the 2022 level.
• Group universal life and whole life were up 9%.
• Critical illness insurance premiums were up 7%.
• Hospital indemnity premiums were 6% higher.
• Dental coverage was up 5%.
• Short-term disability coverage was up 4%.
• Accident insurance rose 4%.

The biggest driver: personal finances

One of the main drivers of this surge in employee uptake of voluntary benefits is that they can often defray expensive and sudden expenses.

With the increase of high-deductible health plans and the resulting potential high out-of-pocket expenses workers may face, they are gravitating towards products that can provide much-needed cash in case of an unexpected event. These include many of the benefits that have seen strong sales growth in the last few years:

Accident insurance — This coverage provides a lump-sum cash payment to an individual due to an event covered under the policy. The funds can be used as needed to help cover things like deductibles, out-of-pocket medical costs or everyday living expenses.

Critical illness insurance — This provides a lump-sum payment or monthly payments to help cover expenses if a policyholder is diagnosed with a serious illness covered by the policy. This type of insurance supplements their existing health insurance and is designed to help them focus on recovery instead of costs.

Hospital indemnity — Hospital indemnity insurance supplements existing health insurance coverage by helping pay expenses for hospital stays. Depending on the plan, the insurance gives the policyholder cash payments to help pay for the added costs that may arise while they recover.

Other products that help policyholders save money include dental and vision insurance, pet insurance (in the face of massive increases in veterinary costs), income protection and telemedicine services.

The takeaway

There are a number of other voluntary benefits that employers can offer, but the above are the ones that directly can help your employees if medical bills hit unexpectedly.

Premiums for these various coverages are either paid by the employer, split between the employer and employee or solely paid by the worker. Arrangements will vary between employers. Premiums are often reasonable.

More importantly, these coverages offer peace of mind that in the event of an accident or illness, the related expenses won’t break the bank.

Both employers and employees have much to gain from a solid voluntary benefits program. 

For employees, being able to enroll in an insurance product through a workplace voluntary benefits program offers them the advantage of group pricing, the convenience of paying through payroll deduction, and perhaps access to insurance that would be difficult to get on an individual basis.

For employers, offering a range of voluntary insurance products can help increase employee satisfaction – along with loyalty and morale – and make the business more competitive in attracting and retaining the best talent.

These advantages alone, however, do not ensure that a voluntary benefits program will be a success. Careful planning, including the selection of benefits to offer, choice of vendors and well-crafted communications, are keys to program success. Consider the following:

Get the right mix – Bring in the kinds of benefits that employees want and will enroll in. Survey employees as to what types of additional benefits they would participate in if given the opportunity. Depending on your employee demographics, these could include additional life insurance options, long-term care – or even pet insurance.

Voluntary benefits enable employees to self-customize an individual benefits package that is uniquely appropriate to them.

Look for gaps – Look for gaps in your company’s current benefits coverage, and consider how voluntary benefits plans can be used to fill them. 

For companies that have had to scale back on their regular benefits package, voluntary benefits can be particularly helpful. If your benefits budget is tight and, for example, needs to be dedicated to helping fund medical benefits, offering dental and vision on a voluntary basis gives employees easy and affordable access to these benefits.

Get the word out – While we can often supply some communications materials, your internal communications concerning the program will help to incorporate it into your overall benefits program in the eyes of employees, making it more likely they will enroll. 

Consider announcing new voluntary benefits offerings in a communication from top management, which will demonstrate the company’s commitment to the program.

Make voluntary benefits enrollment a part of your annual enrollment process, and incorporate descriptions and information on voluntary benefits offerings into the communications materials for your core plans.

Work closely with us – We are here to help you make a selection that best fits your company’s needs, and to help you communicate with your employees and enhance enrollment.

This will be particularly important if any of the voluntary benefits have minimum participation requirements. We can come in for presentations, individual meetings or enrollment sessions, all of which can be very effective in increasing participation in these programs.

The takeaway

Voluntary benefits can be a great add-on to any company’s benefits program. Careful planning and consideration of the various issues that can affect participation can increase the chances of program success.

Employers nationwide are looking for ways to attract and retain talent and differentiate themselves from competing employers, and many are looking to the two most popular voluntary benefits: employee dental and vision plans.

That’s important in today’s tight job market. After all, a recent survey from CareerBuilder found that 55% of workers believed an employer’s menu of benefits was more important than salary when considering a job position or offer.

Here’s why dental and vision benefits are so popular and why, if you don’t already do so, you should consider offering them as well.

Background

For many years, dental and vision plans were employer-paid. They were just part of a standard package available to full-time workers at little or no cost to themselves.

However, as businesses have tightened their belts, many of them moved dental and vision plans to the voluntary benefits side of the ledger, with employees picking up some or all of the premium costs via payroll deduction.

Even when workers are covering the costs, dental and vision plans are overwhelmingly popular with them, because of the relatively low out-of-pocket premiums and the terrific value they provide.

Appeal to workers

Employees like vision and dental benefits because they provide real savings that they and their families are able to see every year — because they actually use the plans. 

That’s compared to other voluntary benefits like major medical, life insurance and disability insurance, which employees may need many years down the road, if ever.

According to the “2021 MetLife Employee Benefit Trends Survey,” 68% of employees consider dental insurance and 49% consider vision benefits to be among their “must have” benefits.

Their employers like them because they can provide these benefits, cementing the bond of loyalty between the employer and employee, for a small fraction of the overall compensation budget. Indeed, dental premiums have been falling in recent years.

Appeal to employers

Employers are also embracing dental and vision care as research is increasingly pointing to good dental and vision health as correlated to overall health — hopefully improving worker productivity and reducing eventual health care costs. 

For example, diabetes and high blood pressure are increasingly being discovered during routine eye exams. Optometrists across the country are commonly finding early warning signs of hypertension from observing ocular pressure — a nearly invisible symptom outside of eye exams.

Their patients armed with this knowledge are able to seek intervention before their condition worsens and results in bigger claims against the employer health plan. A study by HCMS Group found that:

• 34% of all diabetes cases are first identified via eye exams, at a saving of $3,120 per employee, according to HCMS Group.
• 39% of all hypertension cases are first identified via eye exams, at an average saving of $2,233 per employee.
• 62% of high-cholesterol cases are first identified through eye exams — saving $1,360 in eventual health care costs thanks to early detection.

Finally, simply offering something like a vision plan — especially to workers who are at high risk of eye strain from staring at a computer for hours every day — sends an important message to workers that you care about their wellness. 

Who pays premiums?

According to the National Association of Dental Plans:

• Only 6% of employers are currently paying the entire cost of employee dental benefits.
• At 24% of employers, the worker pays 100% of the cost via a payroll deduction program.
• 70% of employers share the premium cost with staff who sign up.

Plan structures

Furthermore, about 80% of group dental plans are preferred provider organizations, or PPOs, which aim to control costs by contracting with a limited network of providers willing to cut their rates to plan members in exchange for the promise of a steady stream of plan referrals.

The percentage of plans embracing the PPO model has been increasing, while dental HMOs and old-fashioned indemnity plans have been losing market share.