Where do Voluntary or Worksite Products Fit into an Employee’s Benefit Package?

With the arrival of fall, two things are guaranteed to happen: leaves will begin to change color, and “Open Enrollment” will start for most employers.

Employers will inform their employees about new benefits and price changes to existing ones. They will often add new benefits to these packages. Increasingly, voluntary payroll deduction products are offered to help bolster or improve their benefit package and fill gaps in their plans. Voluntary payroll deduction products include supplemental life insurance, accident, short and long-term disability, and even pet insurance. The key to a successful enrollment is a good communication plan. These are typically designed and implemented by a representative from the employer and a benefits specialist. Insurance company wholesalers can also help develop the communication plan.

While a significant majority of larger employers provide both group Short-Term and Long-Term disability insurance to their employees, as you look at the benefits offered by smaller employers, you find a very different reality. Many smaller employers or those that have a heavy concentration of employees that are either gray and blue-collar are less likely to provide these plans to their employees. ¹

After extensive research, trying to establish credible statistics on how the size of the firm relates to the availability of disability, both short-term and long-term, is difficult. Much of the research was done pre-Covid, and until new data is collected and published by the Bureau of Labor Statistics, the most recent data I found suggested that approximately 36 percent of civilians (non-governmental) offered short-term disability, and around 34% offered long-term disability.¹ Most of these plans were funded by the employer. However, approximately 15% had some employee premium requirements. In other words, in the civilian marketplace, outside of paid time off, vacation, sick days, and various cash-sickness programs, a vast number of employers, certainly concentrated in the less than 100 employee demographics, do not offer either short or long-term disability programs. This is important since such a large percent of the firms, outside of governmental agencies, are in the less than 100 employee size. ²

So how are these employees, and approximately 75 million employers in the 1-99 employee range, able to provide their employees access to short-term and long-term disability and related products, Critical Illness, and Accident Insurance? If most firms cannot bear the cost as an employer, their best option is to look at voluntary payroll deduction products. Interestingly, some of these firms are among the largest and most well-known. You will find American Fidelity, AFLAC, Hartford, Illinois Mutual, MetLife, Mutual of Omaha, Principal, Standard, Voya, UNUM, and many others.

How common is it for firms to offer supplemental disability, critical illness, or accident policies through payroll deduction? According to a survey conducted by the International Foundation of Employee Benefit Plans of their respondent firms, 29% offer short and long-term disability as a voluntary benefit. Just over half, 52% of the responding firms offered accident insurance as a voluntary benefit, and 50% offered Critical Illness insurance as a voluntary benefit.

If voluntary benefits for short and long-term disability, Accident, or Critical Illness are available through your employer, why should you consider purchasing? Often, you will preferentially be pricing and underwriting. The plans can be tailored to your needs or pocketbook. Often, the coverage is portable, so if you move from the employer, you can maintain the coverage. Finally, and this might be the most compelling reason to consider participation is that you are in charge of the process and can determine, based on your concerns and ability to pay, what you purchase. Take the time to talk to your Human Resources office to find out what is available through your employer, and if they don’t offer these types of programs, ask them to consider adding them so you and others at your firm have additional options.

_{¹Paychex, Small vs. Large Employers: The Pros and Cons of Who You Work For, 9/19/2019}

_{² U.S Bureau of Labor Statistics, News Release, Employee Benefits in the United States, March 2024}

_{³ International Foundation of Employee Benefit Plans, 9 in 10 Employers Offer Voluntary Benefits: Here are the Most Common, Justin Held, CEBS, October 11, 2021}

About Bob Herum

Bob Herum has written 14 posts in this blog.

Bob Herum, MSFS, CLU, ChFC, RHU, REBC, DIA, DIF, LTCP CDA President. Bob has over 30 years of experience in the insurance industry and has demonstrated success as a producer, a wholesaler and as a manager. Bob has been published in such magazines as The American College’s Wealth Magazine, National Underwriter, Life Insurance Selling, Broker’s World, NAIFA’s Advisor Today and Health Insurance Underwriters (HIU). Additionally, he has spoken at national, regional and state forums on a variety of disability and worksite sales topics and is a recipient of the W. Harold Peterson Lifetime Achievement Award by the International Disability Income Society (IDIS). Bob retired as a Colonel from the Army Reserves. He is a past President of the Columbus, Ohio NAIFA chapter, a two-time past President with the International Disability Society, past-chair of the NAHU’s Disability Insurance Advisory Group, and past-President for the Cincinnati Society of Financial Service Professionals (FSP). Bob is married to Teri and has one son, Nick.