How Voluntary Employee Benefits in Canada Can Enhance Recruitment, Retention and Satisfaction
Voluntary benefits are additional insurance options that employees can choose to purchase through their employer, usually via payroll deductions. Unlike core health and dental benefits which are typically paid for partially or fully by the employer, voluntary benefits are paid for entirely by the interested employees. They allow workers to customize and enhance their benefits coverage.
While voluntary benefits have been popular in the US for some time, they are an emerging trend among Canadian employers. As noted in an article from Benefits Canada, "voluntary benefits have been available to Canadian plan sponsors for more than a decade, but the market is still underdeveloped compared with the United States."1 However, surveys show increasing interest from employers in offering voluntary options to provide more flexibility and choice.
Most Popular Voluntary Benefits in Canada
Research shows that some of the most commonly offered voluntary benefits by Canadian employers include:
Critical Illness Insurance
Critical illness insurance provides a lump sum payment if an employee is diagnosed with a covered critical illness like cancer, stroke, or heart attack. This can help cover expenses during treatment and recovery. Critical illness insurance is the most popular voluntary benefit according to a survey by Sun Life.
Additional Life Insurance
Many employers provide basic life insurance, but employees can purchase added coverage through voluntary plans. This ensures their families have adequate financial protection if the unexpected occurs.
Pet Insurance
With pet ownership on the rise, pet insurance is a popular voluntary choice to help cover veterinary bills. Employees enjoy the discounted group rates negotiated by employers.
Legal Services
Legal assistance plans provide access to legal advice and services like will preparation at reduced rates. This can provide valuable peace of mind.
Discount Programs
Voluntary discount programs offer savings on things like eyewear, gym memberships, travel, and electronics. These provide additional purchasing power.
Benefits for Employers
Offering voluntary employee benefits can provide numerous advantages for employers in Canada. One of the biggest benefits is increased employee satisfaction and engagement. When employees have access to customized benefits that meet their unique needs, they feel valued and appreciated. This leads to higher morale, productivity, and loyalty.
Voluntary benefits also give employers an affordable way to expand their benefits offerings and remain competitive, without taking on excessive costs. Rather than footing the entire bill, employers can provide a set contribution while employees pay the remainder of the premiums through payroll deductions. This allows employers to attract top talent while controlling benefit expenses.
Enhanced recruitment and retention is another major incentive for employers. A robust voluntary benefits package can give companies an edge when competing for talent. Employees today strongly consider benefits when evaluating job offers. Voluntary options allow them to tailor coverage based on lifestyle factors like pet ownership or commuting habits.
Finally, voluntary benefits shift more control over coverage into employees' hands. Rather than forcing one-size-fits-all options, employers empower staff to choose benefits that best address their individual circumstances. This caters to diverse needs across generations and life stages.
Benefits for Employees
Voluntary benefits provide several advantages for employees. By accessing group rates negotiated by their employer, employees can get discounted pricing on additional coverage like critical illness or identity theft protection. This group purchasing power makes the benefits more affordable than if the employee shopped individually.
Voluntary benefits also allow employees to customize their benefits package with coverage that matters most to them. For example, a pet owner may elect to purchase pet insurance through their employer. Others may opt for legal services coverage if they anticipate needing legal help. This ability to pick and choose benefits provides a greater sense of control.
Many voluntary benefits are paid through convenient payroll deductions, avoiding the hassle of bills and reimbursement claims. Premiums are deducted directly from paychecks, providing easy administration.
Overall, voluntary benefits give employees more flexibility over their benefits coverage. By accessing discounted group rates and customizing their package, employees can supplement their core benefits in a personalized way.
Considerations for Implementation
There are several important considerations when implementing a voluntary benefits program to ensure it is effective and provides value for both employers and employees:
Clear communication - Employers need to clearly explain the voluntary offerings and enrollment process so employees understand their options. This can be done through benefit fairs, emails, posters and more. Streamlined materials and FAQs help simplify the process.
Streamlined enrollment - The enrollment process should be quick and easy, often handled online or through a benefits counselor. This improves participation rates. Automated administration also reduces workload for HR staff.
Assessing vendor options - It's critical to vet potential voluntary benefit vendors on their pricing, customer service, breadth of offerings, and administration capabilities. Getting quotes from multiple providers is wise.
Determining subsidies - Employers must decide which voluntary benefits to partially subsidize vs having employees pay 100%. Offering some employer funding often boosts enrollment.
Aligning with demographics - The voluntary offerings should connect to the employee population. Younger groups may prioritize pet insurance while older workers want critical illness coverage.
Choosing the Right Voluntary Benefits
Selecting the optimal voluntary benefits to offer requires careful consideration. Employers should take the following steps when evaluating options:
Assess employee needs - Conduct surveys and focus groups to understand what additional coverages employees are most interested in. Factors like demographics, life stages, and family status often influence the benefits employees value most.
Get employee input - Directly ask employees what voluntary benefits they would appreciate and find value in. Their perspectives should guide what options you ultimately offer.
Prioritize offerings - Once you've gathered employee input, determine which benefits to offer based on interest, affordability, and strategic alignment. Focus on the options that will deliver the greatest impact.
Evaluate costs - Research pricing models (fully employer-paid, partially subsidized, or 100% employee-paid) from various vendors. Assess the costs versus value for each offering to determine what is financially viable.
By carefully evaluating voluntary benefits options with employees' needs and perspectives in mind, employers can craft a strategic program that adds value. Getting buy-in from employees also leads to higher enrollment and satisfaction.
Administering and Managing Voluntary Benefits
Once voluntary benefits have been selected and implemented, employers need to have a plan for administering and managing them on an ongoing basis. This includes setting up enrollment, facilitating payroll deductions, streamlining administration, and communicating any changes to employees.
A key consideration is how to handle enrollment in voluntary benefits. Many employers offer an open enrollment period where employees can select the voluntary coverages they want for the upcoming year. This is often paired with enrollment in core health benefits. Other options include allowing enrollment at any time or aligning sign-ups with certain life events like getting married or having a child.1
Payroll deduction is the most convenient system for employees to pay voluntary benefit premiums. The premium amount is deducted from each paycheck and remitted to the insurance provider or benefit company. This facilitates easy administration and takes the burden off employees to make payments separately.
Ongoing administration of voluntary benefits includes tasks like adding/removing employees from plans when they join or leave the company, making changes to coverage, filing claims, and handling renewals each year. Many employers work with brokers or benefit administration platforms to manage this seamlessly.
Finally, clear communication is essential so employees understand what voluntary benefits they have access to, any costs involved, and how to utilize the benefits. Any changes to offerings should be announced well in advance so employees can make enrollment decisions.
Measuring Success
It's important for employers to measure the success of their voluntary benefits programs. This allows them to gauge the value and ROI of the offerings, and determine if any changes need to be made. Some key metrics to track include:
Employee participation rates - The percentage of eligible employees who enroll in voluntary benefits indicates whether the options are appealing and aligned with their needs. A low participation rate may signal poor communication or offerings that don't provide enough value.
Utilization rates - Monitoring how frequently employees use the voluntary benefits shows if they are getting value from them. Low utilization could mean the benefits don't provide enough value or employees don't understand how to maximize them.
Renewal rates - The percentage of employees who continue their voluntary benefits at renewal time also demonstrates satisfaction with the offerings. A high renewal rate suggests the benefits are working for employees.
Employee surveys - Conducting periodic surveys gives direct feedback on how employees feel about the voluntary benefits program. Their input can reveal gaps and opportunities for improvement.
By regularly tracking these metrics, employers can determine if their voluntary benefits plan is successful, and make any necessary changes to enhance the program. This helps ensure it continues meeting both employer and employee needs.
Voluntary Benefits Trends
The world of voluntary benefits is rapidly evolving as employers aim to provide more innovative and personalized offerings. Some key trends shaping the voluntary benefits landscape include:
Growing variety of offerings - Employers are expanding their voluntary benefits menus beyond traditional options like critical illness and accident insurance. Newer voluntary benefits gaining traction include identity theft protection, pet insurance, legal services, discount programs, financial planning tools, and more. According to a study by Mercer, over half of employers now offer 10 or more voluntary benefits.
Financial wellness tools - With financial stress being a major issue for employees, voluntary benefits aimed at improving financial wellness are on the rise. These include student loan assistance, retirement planning services, budgeting apps, and access to financial advisors. Providing these tools demonstrates an employer's commitment to overall wellbeing.
Online portals and apps - Leading providers are enhancing the voluntary benefits experience through user-friendly online portals and mobile apps. These make it easier for employees to learn about options, enroll, file claims and manage their benefits year-round.
Personalization - Employers are increasingly tailoring their voluntary offerings based on the demographics of their workforce. Younger employees may prioritize pet insurance, while older workers value critical illness coverage more. Allowing employees to mix and match the options that matter most to them promotes higher engagement and satisfaction.
Conclusion
In summary, offering voluntary employee benefits can provide significant advantages for both employers and employees in Canada. For employers, voluntary benefits enhance recruitment, retention, and employee satisfaction without a major impact on the bottom line. Employees gain more personalized coverage and greater control over their benefits selection. With strategic planning and execution, voluntary benefits programs can be a win-win element of any Canadian company's overall benefits package.
Some tips for successfully implementing voluntary benefits include clearly communicating offerings, streamlining enrollment, assessing vendor options carefully, and aligning benefits with employee demographics and needs. Ongoing administration and management are also key to ensure a smooth experience for HR teams and employees.
Looking ahead, voluntary benefits are likely to continue growing in popularity among Canadian employers. As the job market remains competitive, companies will increasingly look for affordable ways to differentiate their benefits offerings. Voluntary benefits provide a flexible solution to expand options in a strategic manner. Companies that embrace voluntary benefits thoughtfully can gain a competitive edge in recruitment and retention.