Employee benefits are the backbone of how businesses support their teams. They help employees stay healthy, plan for the future, and feel valued.
However, not all benefits serve the same purpose.
Core benefits cover the basics, like health insurance and retirement plans. Voluntary employee benefits, on the other hand, offer extra flexibility and personalization. Together, they create a package that supports employees and meets legal requirements.
Happy employees aren’t just better at their jobs ー they’re more efficient. The numbers speak for themselves. According to Gallup, 75% of medical costs come from preventable conditions, and burnout costs businesses $322 billion globally in turnover and lost productivity.
Poor well-being can also drive up voluntary turnover costs by 15%–20% of the payroll. Therefore, investing in benefits that boost well-being is smart for any business.
In this post, we’ll dive into the difference between core and voluntary employee benefits. We’ll also examine how voluntary benefits can benefit employers by providing flexible, personalized insurance options that cater to a diverse workforce, improving satisfaction, retention, and overall workplace success.
Let’s get started.
What Are Core Employee Benefits?
Core employee benefits are the foundation of any benefits package. Employers provide these essential offerings to support their workforce’s health, well-being, and financial security. Common examples include health insurance, retirement plans, and paid time off.
In California, core benefits often go beyond the basics. State laws require specific offerings like paid sick leave and disability insurance.
For instance, California’s Paid Sick Leave Law mandates that employees earn at least one hour of paid sick leave for every 30 hours worked. Similarly, state disability insurance (SDI) provides partial wage replacement for employees unable to work due to illness or injury.
A strong benefits package signals that you value your team’s well-being. This can set your business apart in competitive hiring markets like San Diego, where employees often weigh benefits as much as salary when deciding where to work.
What Are Voluntary (Ancillary) Employee Benefits?
Voluntary employee benefits, also known as ancillary benefits, are optional perks employers offer to complement core benefits. These are not mandatory but allow employees to tailor their benefits to fit their unique needs, depending on where they are in life.
Common examples of voluntary employee benefits include:
- Dental Insurance: Covers routine check-ups, cleanings, and major dental procedures.
- Vision Insurance: Helps with the cost of eye exams, glasses, and contact lenses.
- Life Insurance: Provides financial security for employees’ families in case of an untimely death.
- Accident Insurance: Offers financial support for unexpected injuries and related expenses.
- Critical Illness Insurance: Covers costs associated with severe illnesses like cancer or heart disease.
- Hospital Indemnity Insurance: Helps cover out-of-pocket medical expenses related to hospital stays.
- Pet Insurance: Provides coverage for veterinary expenses for employees’ pets.
These voluntary employee benefits can greatly affect how employees perceive their overall compensation. While core benefits provide the essentials, voluntary benefits show that an employer cares about the “extras” that enhance quality of life. 81% of employees say they are likelier to stay at their jobs if benefits meet their needs.
Offering voluntary benefits is a win-win situation for businesses. Employees gain additional resources without the employer shouldering the full financial burden, as many of these perks are employee-funded through payroll deductions. This flexibility allows employers to build attractive packages while managing costs effectively.
Key Differences Between Core and Voluntary Benefits
Core and voluntary employee benefits serve different purposes but work together to create a well-rounded compensation package.
Core benefits provide every employee’s essentials, while voluntary benefits add flexibility and personalization. Understanding the distinctions can help employers design a comprehensive voluntary benefits program that meets legal requirements and employee preferences.
Purpose & Nature
Core benefits are the backbone of employee compensation. Offerings like health insurance and retirement plans are often required by law and are very important for employee well-being.
Employers offer voluntary benefits to fill gaps in traditional health insurance and enhance employee satisfaction. Voluntary employee benefits are add-ons designed to supplement core benefits, giving employees options that cater to their individual needs, like dental or vision insurance.
Cost Structure
How are they paid for? Core benefits are typically employer-funded. This means businesses bear the cost as part of their commitment to supporting their workforce.
Voluntary employee benefits shift some of the financial responsibility to employees. These perks are often funded through payroll deductions, making them an affordable way for employees to access additional resources and reduce out-of-pocket expenses.
Flexibility & Customization
Every person has their own needs. Core benefits are standardized across the company. All employees receive the same baseline coverage, which ensures fairness and consistency.
Voluntary employee benefits, however, are all about choice. Employees can select the options that make the most sense for them, whether extra coverage for their family or specific policies tailored to their lifestyle.
Advantages of Offering Voluntary Benefits
Offering these voluntary employee benefits signals that you care about the whole person, not just the job they do. And when 51% of the workforce is actively trying to leave their current job, the numbers are stacked against you.
Employee assistance programs (EAPs) are another valuable voluntary benefit that provides support in areas such as mental health and personal well-being.
Here’s how voluntary benefits can make a difference:
Enhanced Employee Satisfaction and Morale
Employees feel valued when they can access benefits that meet their specific needs. Voluntary benefits like dental, vision, or accident insurance show that the company is invested in their well-being. This leads to higher job satisfaction, which can boost overall morale across the team.
Increased Employee Retention and Loyalty
Employees who feel supported are more likely to stick around. Voluntary benefits help build a workplace where employees feel cared for, reducing turnover. It’s a small investment that fosters long-term loyalty and saves employers the cost of recruiting and training replacements.
Attraction of a Diverse Talent Pool
In competitive job markets, benefits can set your business apart. Offering voluntary benefits appeals to a wide range of candidates, from those starting families to those planning for retirement. This flexibility helps attract a diverse workforce, bringing fresh perspectives and varied skills to your team.
Potential for Cost Savings for Employers with Disability Insurance
Voluntary benefits often come with minimal direct costs to employers, as they are typically employee-funded. Additionally, these benefits can reduce absenteeism and healthcare expenses by providing resources that keep employees healthier and more engaged.
How Employers Can Implement a Voluntary Benefits Program
Adding voluntary employee benefits doesn’t have to be overwhelming. A clear plan makes it easy to offer perks employees will value.
This process starts with listening to your team. Small steps can lead to big improvements in how employees feel about their workplace.
Here’s how to start:
1. Evaluate Employee Needs and Preferences
Find out what your employees care about most. Send surveys or host focus groups to collect feedback. Ask about the benefits they value, like dental or supplemental health coverage. Use this input to focus on options that will make the biggest impact.
2. Collaborate with Insurance Providers and Insurance Brokers
Partner with experienced insurance providers. Compare plans to find ones that match your employees’ needs. Look for bundled options to simplify your offerings. Choose a provider with clear pricing and flexible options.
Working with an insurance broker like Terri Yurek also simplifies the process. Brokers understand the market and can help you identify plans that fit your employees’ needs without breaking your budget. They’ll negotiate with insurance providers, compare bundled options, and ensure clear pricing.
Long story short, a broker’s knowledge saves you time while building a benefits package your team will appreciate.
3. Communicate the Value of Voluntary Benefits
Make sure employees know what’s available. Explain how each benefit works and why it’s useful. Share examples, like how accident insurance covers unexpected bills. Use emails, meetings, or handouts to spread the word.
The Hidden Power of Voluntary Benefits in Employee Happiness
Voluntary employee benefits are a way to show employees that their unique needs matter. They complement core benefits, offering flexibility, choice, and a personal touch that can make your business stand out.
For employers, they’re an opportunity to build loyalty and attract a diverse, engaged workforce.
If you’re self-employed or run a small business, navigating the world of employee benefits can feel overwhelming. That’s where professional guidance makes all the difference.
Working with an experienced insurance broker will help you craft a benefits package that balances employee satisfaction with cost efficiency.
Get in Touch With Our Team
Terri Yurek Insurance specializes in making benefits work for businesses like yours. Whether you’re looking to enhance your offerings or explore new options, we’re here to help.
Reach out today to learn how voluntary benefits can elevate your business and support your team. Let’s build something great together.