Voluntary Benefits Explained: What to Offer and Why It Works

What are voluntary benefits?

Voluntary benefits are optional insurance products and services that employers offer to eligible employees as part of their overall benefits package. Unlike core employee benefit plans like statutory health coverage or pensions, these benefits are paid partly or fully by the employees, typically through payroll deductions.

By allowing workers to choose benefits tailored to their personal needs, voluntary benefits help enhance the total compensation package without significantly increasing costs for the company. These benefits are usually offered at group rates, making them more affordable than individual plans.

Some of the most common voluntary benefit options include:

Many employees see these options as a financial safety net, helping to cover gaps in traditional insurance coverage and reduce out-of-pocket expenses.

Key voluntary benefits

The best voluntary benefits plans go beyond the basics. They provide employees with affordable, flexible options that reflect their everyday challenges; financial, medical, and personal.

Supplemental health insurance

Traditional health insurance rarely covers every scenario. That’s where supplemental insurance comes in; helping employees manage out-of-pocket expenses for unexpected health events.

Some common offerings include:

These benefits cover gaps that standard plans leave behind, offering a financial safety net when employees need it most.

Financial wellness programs

Financial stress affects productivity, morale, and even physical health. A strong voluntary benefits plan includes tools to improve employees’ financial security over the long term.

Popular financial-focused benefits:

• Student loan repayment support (direct deposit to reduce loan balances)

• Financial counseling and budgeting help from accredited professionals

• Emergency savings programmes with automatic contributions

These services help many employees manage costs more confidently, without relying on high-interest credit or risky loans.

Lifestyle and convenience perks

Voluntary benefits also address personal needs that aren’t medical or financial, but still matter to employee satisfaction.

Examples of lifestyle-related benefit options:

• Pet insurance for veterinary bills

• Legal services for wills, contracts, or disputes

• Identity theft protection with monitoring and recovery tools

• Gym memberships and wellness programmes to support physical and mental health

Offering voluntary benefits like these shows that a company is listening to what workers actually want, not just what’s required by law.

By mixing health, financial, and lifestyle support, employers can create a diverse range of options that appeal to many advantages employees are actively looking for.

Differences between US and UK voluntary benefits

While both the US and UK aim to support employee wellbeing through voluntary benefits, how they do it (and what they prioritise) can differ quite a bit. Regulations, cultural expectations, and public services all shape the benefits employees value most.

Regulatory environment

The regulatory frameworks surrounding voluntary benefits are more rigid in the US than in the UK, primarily because healthcare is largely employer-based in the US.

United States

• Employers often offer health insurance, including vision insurance, dental insurance, and hospital indemnity insurance, as part of their employee benefit plans.

• Voluntary benefits like critical illness insurance, disability insurance, and life insurance are heavily influenced by state and federal tax rules.

• Regulations require clarity in payment options, payroll deductions, and administrative fees.

United Kingdom

• The NHS provides universal healthcare, so health-related insurance products are considered supplemental insurance rather than essential.

• Legislation is less prescriptive; employers have more freedom to mix fringe benefits, like gym memberships and employee assistance programs, into their benefits package.

• Voluntary benefits are typically offered via salary sacrifice schemes, offering tax savings to both employers and workers.

Popular offerings by region

Cultural norms and economic conditions influence which voluntary benefit options are most valued.

Implementing voluntary benefits effectively

Choosing the right voluntary benefits is only half the job; rolling them out smoothly is where the real impact happens. From discovery to enrolment, careful planning ensures that employees see the value and actually use the options available to them.

Assessing employee needs

Before offering voluntary benefits, it’s essential to match them with what employees genuinely want and what aligns with business goals.

How to assess effectively:

• Pulse surveys and feedback forms: Quick and targeted questions about preferred benefit options, like pet insurance or student loan support.

• Demographic analysis: Age, location, and life stage help predict interest in things like life insurance, gym memberships, or financial counseling.

• Usage data from current plans: If existing employee assistance programs or vision insurance have low uptake, consider alternatives.

Communication strategies

A well-designed voluntary benefits plan won’t succeed without strong communication. Many employees don’t enrol simply because they don’t know what’s available or how it helps them.

Tips to boost awareness and engagement:

• Multi-channel rollout: Use emails, intranet posts, info sessions, and printed materials to reach all workers.

• Clear, jargon-free messaging: Break down what the benefit is, who it’s for, and how much it will cost after group rates and payroll deductions.

• Highlight real-life scenarios: Explain how a critical illness insurance plan helped cover unexpected out-of-pocket expenses.

💡 Pro tip: Use personalised dashboards or short explainer videos to help employees compare coverage options easily.

Enrolment and administration

The easier it is to sign up, the more likely employees will take advantage of the benefits available.

Best practices for smooth enrolment:

Avoid processes that feel time consuming or overly complicated; otherwise, even the best benefit options can go unused.

Measuring the impact of voluntary benefits

Offering voluntary benefits is only valuable if it actually makes a difference. To justify the investment and improve over time, employers need clear ways to measure success.

Employee engagement and satisfaction

One of the best indicators of a successful voluntary benefits plan is how it affects employee satisfaction and overall morale. If the benefits align with what employees actually need, you’ll likely see an improvement in retention and engagement.

How to measure it:

• Participation rates: Track enrolment in key voluntary benefit options (e.g. pet insurance, financial counseling, gym memberships) to gauge interest.

• Annual engagement surveys: Include questions on perceived value of benefits, accessibility, and personal relevance.

• Exit interviews: Look for patterns where lack of benefit support may have influenced a decision to leave.

• Feedback from employee assistance programs: These can offer insights into emotional wellbeing, mental health needs, and usage trends.

Return on investment (ROI):

Voluntary benefits might be employee-paid, but they still involve administrative fees, tech costs, and time investment from HR. Measuring ROI helps determine if those efforts are worth it.

Key metrics to track:

Employee scheduling and Time-tracking software!

• Easy Employee scheduling
• Clear time-tracking
• Simple absence management

Try for free Request a demo