Voluntary Benefits that Really Matter

 Building a benefits package that addresses today’s workforce diversity

by Elizabeth Halkos

As a benefits advisor, you can become a valued partner to your clients when you help them match voluntary benefits to their employees’ diverse needs.

Preferences differ among the three generations in today’s workforce. There’s an abundance of voluntary benefits on the market today – both traditional and non-traditional – so how do you select benefits that will resonate with their employees?

Without a doubt, employers look to their advisors for recommendations on both core and voluntary benefits in order to build a more robust employee benefits program to help them recruit and retain employees. In particular, they want to structure voluntary benefits that improve employees’ financial health and provide a financial safety net.

Once considered just a nice extra for a more comprehensive benefits package, voluntary benefits have become an essential element of the employee benefits program. Even though they have to pay the premium, voluntary benefits have grown in popularity because they allow employees to customize their benefits package. The key to achieving a high opt-in rate is for employers to offer voluntary benefits that fill in the gaps of core benefits and meet the needs of employees, in addition to supporting business objectives.

What should advisors recommend as the basis for voluntary benefits choices?

Because the employee is the buyer of voluntary benefits, employers need to know what voluntary products will appeal to each demographic of their workforce.

Today’s workforce spans three generations (Millennials, Generation X and Baby Boomers) and each generation looks at work, life, money and finances in totally different ways. By knowing their clients’ workforce demographics, a benefits advisor can recommend voluntary benefits that will resonate with employees.

The Baby Boomers are the oldest generation in the workforce. According to AARP, they make up 38 percent of the workforce. And some are already contemplating retiring. The middle generation is Generation X which has a distinctly individualistic outlook. The U.S. Bureau of Labor Statistics reports that Gen Xers make up one-third of the workforce.

The remainder make up the youngest generation in the workforce – the Millennials, also referred to as Generation Y. They have higher expectations when it comes to promotions and recognition. Employees often have more financial stress and needs than employers realize. In a July 2014 Harris Poll on behalf of Purchasing Power, 80 percent of employees working full-time said they have financial stress today.

Their stress is related to both long-term and short-term financial needs. Specifically, 67 percent indicated the stress is related to long-term financial needs (savings, retirement plan, etc.), while 60 percent said it was short-term related (everyday living expenses as well as unexpected financial needs such as a car repair, appliance replacement, or emergency medical expenses).

The Voluntary Benefits Menu

What’s available in the marketplace today? Combining traditional and non-traditional voluntary benefits yields a long menu of options.

Traditional voluntary products can fill in the gaps left by scaled-back core benefits, higher deductibles and more consumer-driven health plans. Not surprisingly, these benefits are also the most popular with employees.

The non-traditional voluntary products in the marketplace provide a wide array of benefits that employees can choose from to enhance their lifestyle, protect their well-being and improve their financial wellness. They can generally be categorized by purpose:

• Buying and banking options;
• Lifestyle and convenience options;
• Personal care and improvement; and
• Financial safety nets.

What Matters to Today’s Employees?

Breaking today’s workforce down by generation reflects a different picture of what is important to them. Here is a closer look at each of the three generations, their attitude to their job and their financial situation, as well as some of the non-traditional voluntary benefits that can help to address their financial situations.

Baby Boomers (born 1946 – 1964)

Baby Boomers’ work ethic is driven and committed, and they believe that rewards come after paying one’s dues and building a career.

Their greatest fear is losing their pension, savings or job and being unable to retire. Keys to job retention for Baby Boomers are salary, job security and health benefits. They want to count on medical insurance and back-up care for their parents.

Some Baby Boomers are in second careers. Some still have grown children living at home and/or are helping them out financially until they can support themselves. For the most part, if there’s something Baby Boomers want, they are able to buy it. However, many will question if they should buy it or rather save that money. Instead, they are trying to be financially responsible and scaling back from a materialistic lifestyle.

Baby Boomers, even if they are high earners, worry about retirement – both having enough money for retirement and wondering when the right time is to retire. Non-traditional voluntary benefits that would appeal to Baby Boomers include:

• Discount Programs
• Financial Counseling
• Legal Assistance
• Auto Insurance
• Home Warranty Insurance
• Homeowners’ Insurance
• Long-Term Care Insurance

Wellness Programs Generation X (born 1965 – 1979)

Gen Xers’ work ethic is balanced and flexible with a ‘work hard, play hard’ attitude. They believe in accumulating skills by taking on differing projects.

Their greatest fear is being overshadowed by Millennials and being overlooked for promotions. Keys to job retention for Generation X are salary, autonomy, independence and promotion, promotion, promotion! Their benefits needs include income protection, family support, customizable plans, automatic retirement management and retirement education.

This generation’s financial stressors come from multiple angles. They are raising children, preparing for care of their aging parents and trying to save for their own financial futures. The rapidly-changing retirement, Social Security and healthcare landscape hits them the hardest. Because of these factors, they appear to be having the toughest time financially.

They find it difficult to meet their household expenses on time each month and are the most likely to carry balances on their credit cards. Non-traditional voluntary benefits that would appeal to Gen Xers include:

• Discount Programs
• Employee Purchase Programs
• Flexible Spending Accounts
• Financial Counseling
• Wellness Programs
• Employee Assistance Programs
• Child Care
• Cyber Security Insurance
• Homeowners’ Insurance
• Identity Theft Protection
• Long-Term Care Insurance

Millennials (born 1980 – 2000)

Millennials’ work ethic is that professional fulfillment matters more than salary. They expect rapid promotion and meaningful work or they seek other opportunities.

They often juggle many jobs and move from job to job frequently. Their greatest fear is silence, unplugging, routine and eternal internship. Keys to job retention for Millennials are personal relationships, multiple tasks and fast rewards. Their benefits needs include portable benefits, forced savings, financial education and concierge services.

Key values for Millennials include future financial security and better quality of life. To improve their financial situation, they need a better job or a promotion and expert advice on how to make the most of their money in addition to beginning a 401(k) or other retirement plan.

In general, Millennials are very highly educated. One-third of Millennials have four-year college degrees, but that comes with a high price tag. The average Millennial has $29,000 in student loan debt alone.

Not surprisingly, they are also more concerned about paying down existing debt or incurring additional debt than their day-to-day expenses. Non-traditional benefits that would appeal to Millennials include:

• Employee Purchase Programs
• Discount Programs
• Tuition Assistance
• Employee Assistance Program
• Wellness Program
• Flexible Spending Accounts
• Financial Counseling
• Identity Theft Protection

Paving the Road to Financial Wellness with Voluntary Benefits: A Guide to Tailoring Benefits to Employees’ Diverse Needs is a solid reference for benefits advisors. This interactive guide outlines the comprehensive array of voluntary benefits available today; profiles typical employee segments; and illustrates which voluntary benefits best fit each employee type. The more valuable the advice you are able to give your clients, the more valuable your relationship will be with your clients – and the greater your revenue stream! ♦