As employees continue to look for ways to stretch their paycheck and recover from the financial hardship of the pandemic, voluntary benefits will get more attention. (Photo: Shutterstock)
COVID-19 has disrupted our world in ways we never would have imagined this year. Likewise, the pandemic has changed the employee benefits landscape. One of those changes is that voluntary benefits have taken on even more importance.
Voluntary benefits have always been a win-win. Employers find them an excellent recruiting and retention tool while employees see voluntary benefits as an opportunity to choose benefits they need or want. In recent years voluntary benefits have seen more popularity as the products themselves have become more diversified and appealing to multiple generations in the workplace.
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The impact of COVID-19 on employees' lives and their finances really shined a spotlight on the value of voluntary benefits, which have given employers a way to meet the shifting needs and priorities of their workforce during this critical time.
In 2021, employers will continue to seek ways to expand the voluntary benefit offerings in their employee benefit packages to provide more-customized options to meet workforce needs, whether that's targeting traditional voluntary benefits or non-traditional ones for lifestyle, personal wellness and financial health.
What's ahead in 2021 for voluntary benefits?
1. A growth spurt for the voluntary benefits industry.
Over the past decade, voluntary benefit sales have grown at a compounded annual growth rate of 5% a year, as employer-paid benefits declined.
In the voluntary benefits space, traditional insurance-related products such as supplementary life insurance, disability income, and dental account for over 60% of total 2019 sales. However, non-traditional voluntary benefits, like pet insurance, elder care, and student loan services programs have gained traction, particularly with younger buyers, who prefer the increased choice and customizable options.
Look for a jump in the growth rate in 2021 as employers expand their offerings and as employees are choosing voluntary benefit options as a 'go-to' to help them face financial challenges as a result of COVID-19.
2. All voluntary benefits that address employees' financial well-being will likely take top billing.
One critical piece of pandemic disruption that employers can't overlook is their employees' financial situation. For many employees, COVID-19 certainly drew attention to their fragile financial condition. In September, 84% of Americans reported that the COVID-19 outbreak was causing stress on their personal finances. And 39% say they will feel "very/somewhat worried" about their financial situation 12 months from now.
As a result of the impact the pandemic is having on their finances, 50% of people feel it is more important now that employers offer financial wellness benefits. And when asked what their employer could do to have the most significant impact on their personal financial situation, they said, "make a contribution to my rainy day fund/emergency savings account.5
In 2021, as employees continue to look for ways to stretch their paycheck and recover from the financial hardship of the pandemic, voluntary benefits like employee purchase programs, bill payment programs, financial counseling and student loan repayment benefit programs will get more attention. It's also possible we see more financial wellness and well-being products introduced next year.
3. Even more customization of benefits will be of interest to employees.
Being able to pick and choose benefits that are important to them has always been the attraction of voluntary benefits for employees. Because of the pandemic, many voluntary benefits will stand out as options for these times.
We'll see employees paying more attention to benefits that they might not otherwise have found as important or needed pre-pandemic, such as pet insurance, identity theft protection, legal insurance and employee purchase programs. With more people working from home, an increase in pet adoptions is making pet insurance a highly requested voluntary benefit. Because cash and credit are not always readily available, the ability to purchase home office and workout equipment or needed appliances through the convenient payroll deduction system of an employee purchase program can be an invaluable benefit.
As a result of the pandemic, we can also expect more interest in critical illness insurance and mental health benefits. A recent Mercer survey revealed that 22% of employers are enhancing voluntary benefits like critical illness insurance and 20% are adding or improving behavioral health care benefits.
4. Employees will continue to look more closely at voluntary benefits available to them.
The pandemic has forced many employees to look for resources and assistance they may never have thought about previously. Pre-pandemic, when open enrollment time rolled around and the entire employee benefits package needed review, it was often easy for employees to overlook some benefits.
For the current enrollment season, nearly 7 in 10 employees (71%) plan to spend more time reviewing their voluntary benefits as a result of COVID-19 than they did last year and more than half (53%) plan to make changes to their benefits coverages.8
Now that employees have begun to pay more attention to voluntary benefits, we'll see that trend continue in 2021. Additionally, we'll see employers scheduling more off-cycle benefit enrollments, especially for new voluntary benefits, in order to provide employees additional options that help with parts of their lives affected by the pandemic.
In 2021 voluntary benefits will become an even more personal choice for employees as they continue to navigate the effect the pandemic has had on their financial situation. Being able to pick and choose products that will meet their individual needs is going to be a lifeline for many who are still recovering.
Mike Wilbert is chief revenue officer at Purchasing Power, a voluntary benefit provider. He has 30 years of experience in the insurance and voluntary benefits industry.
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