Expanding the Benefits Horizon: How Employers View Voluntary Offerings

Summary

The benefits landscape is rapidly evolving in the workplace. As employers navigate a dynamic labor market and look to attract and retain a talented work force with diverse needs, one option is to extend their benefits offerings beyond core benefits like retirement plans and health insurance. Data from the Employee Benefit Research Institute’s (EBRI’s) previously published Financial Wellbeing Employer Survey (FWES), a survey of financial wellness benefit trends among large employers with 500 or more workers, suggest that organizations are increasingly broadening their offerings to include a wide range of benefits that address an equally wide range of worker concerns and priorities. Voluntary benefits — such as dental, vision, and supplemental health benefits — can play a role in helping workers manage day-to-day expenses, weather unexpected events, and better prepare themselves and their families for the future.

To build upon the learnings of the FWES and to develop a deeper understanding of the voluntary benefits market landscape, EBRI has partnered with Lincoln Financial to field Benefits in Focus: Supplemental Health, Dental, and Vision Perspectives. This body of work includes a series of surveys that explore the awareness and utilization of supplemental health, dental, and vision benefits in the American workplace across employer, broker, and employee audiences. The intent is to uncover trends, challenges, and opportunities for strengthening financial protections available to workers at employers of all sizes.

The first survey in Benefits in Focus, focusing on voluntary benefits from the employer’s perspective, forms the basis for this Issue Brief.

Key Insights:

• Ninety-six percent of employers say their benefits budget has grown during the past two years, including 76 percent whose benefits budget has kept up with or exceeded inflation. Budgets are expected to continue to grow; more than two-thirds of employers anticipate increases to their benefits budget in the next 1–2 years. Employers are also looking to bolster their supplemental health offerings with the inclusion of family and reproductive health riders, such as infertility benefits or adoption assistance. Almost two-thirds of employers state that these riders would add value to their supplemental health benefits.
• Most organizations report improvements in employee satisfaction, recruiting, retention, performance, and employee health as a result of their employee benefits program. Improving worker morale is the top-cited reason organizations offer employee benefits, and 85 percent of organizations say they see a positive impact on employee satisfaction because of their benefits program. Nearly three-quarters of employers also see an impact on recruiting, retention, and employee performance, while 70 percent see a positive impact on employee health. Offering a full suite of supplemental solutions amplifies this impact — employers that offer accident, critical illness, and hospital indemnity insurance are even more likely to say their benefits have a positive impact on retention and absenteeism.
• Nearly three-quarters of organizations list health care costs as an issue their benefits program is designed to address, yet only 11 percent offer accident, critical illness, and hospital indemnity insurance. Seventy-three percent of employers say health care costs are one of the top issues faced by employees that their benefits seek to address. While 93 percent offer medical insurance, 83 percent offer dental insurance, and 80 percent offer vision insurance, supplemental health insurance coverage is less commonly included in a benefits program. The most commonly offered supplemental health benefit is accident insurance, but less than half (46 percent) offer it. Far fewer offer critical illness insurance (27 percent) or hospital indemnity insurance (25 percent). Only 11 percent offer all three of these supplemental health insurance benefits.
• Many organizations that offer voluntary benefits have seen an increase in enrollment in these benefits in the past year and higher-than-expected uptake rates. More than one in three organizations that offer dental, vision, or supplemental health benefits say enrollment for each of these benefits is higher than expected. More than a third of organizations that offer supplemental health insurance say enrollment has increased in the past year, and more than four in 10 organizations that offer dental insurance say the same.
• By their own admission, organizations see a need to do a better job of communicating benefits information to employees. Sixty-five percent of employers see room for improvement in how they communicate to employees about benefits. The most common way organizations are communicating with employees is via email, followed by small group meetings, smartphone apps/notifications, text messages, and websites.
• Organizations that currently offer dental, vision, and supplemental health insurance say their health care costs would be higher, and productivity would be lower, if they did not offer these benefits. Employers broadly agree that voluntary benefits ease employee concerns, help workers weather out-of-pocket expenditures, and are affordable for workers and their families. Many organizations feel that if they did not offer voluntary benefits, they would see premiums for their group health insurance plan increase, and some also anticipated lower productivity and more absences.
• Larger employers are currently more likely to offer supplemental health benefits, but small employers see value in these benefits, and their budgets are increasing. Organizations with fewer than 500 employees share the same motivations to offer benefits as larger organizations and agree on the value of accident, critical illness, and hospital indemnity insurance. Sixty-four percent of small employers expect their benefits budgets to grow in the next two years.
• Employers are interested in additional features for supplemental health plans. Ninety-eight percent of employers that offer supplemental health policies say add-on features would be valuable, including preventive care services, family and reproductive health, chronic condition management, enhanced critical illness coverage, and preventive care options.