Voluntary Benefits: What They Are and Why Employees Actually Value Them

Voluntary benefits are supplemental insurance products that employees can elect to purchase at group rates through their employer with premiums paid through payroll deduction. The employer pays nothing (or very little) for the benefit itself, but offers it as part of the benefits package. Employees get access to coverage they could not get on their own at comparable rates. It is one of the most cost-efficient ways a small business can expand its benefits offering without adding meaningful cost to the budget. 

What Are Voluntary Benefits?

Voluntary benefits are insurance products offered in the workplace where the employee chooses to participate and pays the premium through payroll deduction, typically at a discounted group rate. Common voluntary benefits include: dental insurance, vision insurance, life insurance (beyond employer-paid base), short-term and long-term disability insurance, accident insurance, critical illness insurance, hospital indemnity insurance, and legal services plans. Some employers also offer voluntary benefits like identity theft protection, pet insurance, and student loan assistance.

Why Do Employees Value Voluntary Benefits?

Three reasons: convenience, price, and portability. Employees get coverage at group rates — often 20–40% below what they would pay on the individual market. Premiums come out of their paycheck automatically, so there are no monthly bills to manage. And many voluntary products are portable — employees can take them when they leave the company, converting to individual policyholders without re-underwriting.

What Are the Most Valued Voluntary Benefits?

Most Valued by Employees

•  Dental is most requested voluntary benefit; reduces cost of care

•  Vision has high usage; glasses/contacts are regular expenses

•  Life insurance is additional coverage beyond employer base

•  Short-term disability protects income during illness or injury

•  Critical illness coverage is a lump-sum cash benefit for major diagnoses

Most Cost-Effective for Employers to Offer

•  All voluntary benefits: $0 direct cost to employer in most cases

•  Accident insurance: covers out-of-pocket costs from injuries

•  Hospital indemnity: fills gaps in high-deductible health plans

•  Legal services: low cost, high perceived value

•  Identity theft protection: increasingly valued by employees

How Do Voluntary Benefits Help with Recruiting and Retention?

SHRM data consistently shows that employees weigh benefits heavily when evaluating job offers and deciding whether to stay with an employer. A comprehensive voluntary benefits package signals that an employer cares about employee financial wellbeing beyond basic health coverage. For small businesses competing against larger employers with bigger budgets, offering a robust voluntary benefits menu can be a meaningful differentiator — especially when the cost to the employer is minimal.

How Does a Business Add Voluntary Benefits?

An independent benefits broker is the most efficient way to add voluntary benefits to an existing package. The broker identifies appropriate products, negotiates with carriers on your behalf, manages enrollment (often coordinating with your payroll provider for premium deductions), and provides employee education materials. Most small businesses can add a comprehensive voluntary benefits suite with minimal HR time and zero out-of-pocket cost to the employer.

Frequently Asked Questions

Q: Do employers pay for voluntary benefits?

Typically no. Voluntary benefits are employee-paid through payroll deduction. The employer's role is to offer access to the products at group rates and facilitate premium deductions through payroll.

Q: Are voluntary benefit premiums pre-tax?

It depends on the product. Premiums for voluntary dental and vision are typically pre-tax. Premiums for disability insurance may be better paid post-tax so that disability benefits are received tax-free. A broker can advise on the optimal tax treatment.

Q: Can part-time employees receive voluntary benefits?

This depends on the employer's eligibility rules. Many voluntary benefit carriers allow employers to extend coverage to part-time employees, which can be a valuable benefit at no cost to the business.

Q: What is the difference between voluntary and core employee benefits?

Core benefits (like employer-sponsored health insurance) are typically employer-funded or substantially employer-subsidized. Voluntary benefits are employee-paid, elective products offered at group rates through the employer.

Key Takeaways

•  Voluntary benefits are employee-paid insurance products offered at group rates through the employer.

•  Cost to the employer is typically zero — just payroll deduction administration.

•  Dental, vision, disability, and critical illness are among the most valued voluntary offerings.

•  Voluntary benefits expand a benefits package meaningfully without adding to the employer's compensation budget.

•  An independent broker can set up a complete voluntary benefits program with minimal HR involvement.

Sources & References

• SHRM. Employee Benefits Survey 2025. shrm.org

• LIMRA. Workplace Benefits in the United States. limra.com

• MetLife. U.S. Employee Benefit Trends Study. metlife.com