When it comes to benefits packages, who says small business can’t compete with the big guys? With voluntary benefits, smaller employers can offer the same benefits plans as their competitors—at no additional direct cost.
It’s no wonder, then, that interest in voluntary benefits is growing. In fact, 43 percent of small businesses are more interested in voluntary benefits than they were a year ago. That’s because voluntary benefits offer a cost-efficient way to expand an employer’s benefits packages. They also help fill gaps in coverage and eliminate some of the financial risk employees face because of cuts in their benefits packages. There are other advantages, as well.
With voluntary products, employees choose the benefits that best meet their individual and family needs and typically pay for these products themselves, usually through convenient payroll deduction. Individual voluntary benefits are owned by employees, so if they ever leave the company, they can keep their coverage. In many instances where voluntary products are considered group products, employees can convert them to individual policies when they leave to maintain coverage.
According to a LIMRA study of employers, some of the biggest advantages business owners attribute to voluntary benefits include:
- Improvement in worker morale/satisfaction (77 percent).
- No added direct cost to company (75 percent).
- Ability to attract and retain employees (71 percent).
- Giving employees options to purchase less expensive insurance than they could get on their own (69 percent).
- Being able to offer employees a wider array of benefits (66 percent).
With all the advantages voluntary benefits offer, why isn’t every small business offering them? The answer could lie in some of the misconceptions small employers have about voluntary benefits.
Concern over HR administration. HR resources in smaller businesses are very lean. According to research from Colonial Life, 31 percent of businesses with 10 to 99 employees don’t have anyone dedicated to HR, and 37 percent only have one person on staff to handle these duties. In many instances, the tasks of HR fall on the owners themselves or members of their general administrative staff. These individuals worry that adding new benefits will only add to their workload. However, the right voluntary benefits partner can streamline enrollment and administration and lift this responsibility from the employer.
Worry that employees won’t participate. Small companies don’t want to go to the effort of expanding their benefits packages if they don’t think employees will be interested enough to enroll. The good news is that more and more employees are asking for voluntary benefits and are willing to pay for them. One study showed that 47 percent of employees are willing to pay between $25 and $49 more per month for more choices in their benefits plans, with 25 percent willing to pay $50 more per month.
Fear that enrollments will take up too much time. A common misconception is that adding new voluntary benefits will lengthen the enrollment process. But in reality, only one in 10 employers says the time it takes for voluntary benefits enrollment hampers productivity and takes away from core business operations.
Designing a benefits plan that’s simple to use and choosing a voluntary benefits partner that can enroll all employees, including core benefits, reduces the amount of time needed for enrollment. Selecting a carrier that offers benefits counseling as part of its services brings added value to the enrollment process.
Belief that voluntary benefits are only for big corporations. Many smaller employers think that voluntary benefits are designed for bigger companies that have hundreds of employees. While many voluntary benefits plans require 50 or more employees, some cover groups as small as three. A carrier that’s well-versed in the needs of small business can demonstrate how voluntary benefits offer the flexibility to address positive and negative changes in workforce numbers.
Benefits Education Is Critical to Small Business.
Educating employees about their benefits is no longer a luxury for small businesses—it’s a necessity. Although the majority of employers with fewer than 99 employees say it’s important for their workforce to understand their benefits, research from Colonial Life shows that less than half indicate their employees actually do. Small businesses need to get serious about benefits education if they want to get the maximum value from their investment.
Relying on a “self-serve” approach to benefits education and enrollment is not effective. Self-education and self-enrollment activities tend to rank very low within small businesses. That’s why small businesses should choose providers that can meet one-to-one with employees to explain their benefits and help them select the best coverage for their family’s needs. Additionally, carriers that offer customized materials that are attractive and easy to understand will help employees better appreciate and take advantage of the benefits they’re offered.
Compete With The Big Guys
Voluntary benefits allow small businesses to offer benefits packages that can compete effectively with companies of all sizes. Don’t let myths and misconceptions stand in your way. There’s no better time than now to put that competitive advantage to work for you.
About the Author:
Tony Guide is a territory manager for the San Diego/Riverside/Hawaii sales territory of Colonial Life.