Looking For Voluntary Benefits for Employers? Here Are 10 Things You Should Know

THE BENEFITS GAP, by Erik Hill

If you’re an employer or HR professional reviewing your benefits strategy, you’ve probably heard the term “voluntary benefits” thrown around. Maybe you’re wondering what they are and how they fit alongside your core benefits.

This article is written by Erik Hill, a Colonial Life Independent Agent. Our goal is to keep this overview educational and help you think through common voluntary benefit options and enrollment considerations.

Voluntary benefits can be one way to broaden your offerings and help employees manage certain out-of-pocket expenses, depending on the products you make available and how your plan is designed.

Below are ten practical things to know before you get started.

1. You’re Not Legally Required to Offer Them

Unlike workers’ compensation or unemployment insurance, voluntary benefits are completely optional. There’s no legal mandate forcing you to provide them.

That might sound like a reason to skip them altogether. But here’s the thing: just because you don’t have to offer them doesn’t mean you shouldn’t.

Voluntary benefits give you flexibility. You get to decide what makes sense for your workforce without jumping through regulatory hoops.

2. They’re Budget-Friendly (Seriously)

One of the biggest misconceptions? That offering more benefits means spending more money.

With voluntary benefits, you control the costs. You can:

Offer them at no cost to your company (employees pay through payroll deductions)
Partially subsidize certain options
Fully fund specific benefits if you choose

This means you can expand your benefits package without changing your employer contribution strategy, if you choose an employee-paid approach.

3. You Pick What to Offer

As the employer, you’re in the driver’s seat. You choose which voluntary benefits to include and what coverage levels make sense.

This isn’t a one-size-fits-all situation. You can tailor your offerings based on:

Your industry
Employee demographics
Company culture and values
Feedback from your team

The result? A benefits package that actually reflects what your people need: not just a generic checklist.

4. They Can Support Recruitment and Retention

The job market is competitive, and many candidates look at the full benefits package, not just salary.

A well-communicated voluntary benefits program may help you:

Support recruiting conversations
Reinforce your total rewards strategy
Reduce benefits confusion during onboarding and enrollment

How much impact you see depends on your workforce, your communication, and what you offer.

5. They Fill the Gaps in Major Medical Coverage

Here’s something many employers don’t realize: your health insurance plan probably leaves some gaps.

Major medical coverage is great for big-picture stuff. But what about out-of-pocket costs after an accident? Or income replacement if someone gets sick and can’t work?

That’s where supplemental insurance for employees may help. Depending on the plan and policy terms, options like disability insurance, accident coverage, and critical illness plans can help employees prepare for certain expenses related to covered events.

These benefits are generally intended to complement, not replace, your core medical coverage.

6. There Are More Options Than You Think

When people hear “voluntary benefits,” they often think of dental and vision. But the list goes way beyond that.

Here are some common options to consider (names and availability vary by employer and state):

Disability insurance – Designed to help replace a portion of income if an employee can’t work due to a covered illness or injury
Accident insurance – Designed to help with certain costs associated with covered accidental injuries
Cancer insurance – Designed to help with certain expenses related to a covered cancer diagnosis and treatment
Critical illness insurance – Designed to provide a benefit after a covered critical illness diagnosis (based on policy terms)
Hospital indemnity insurance – Designed to pay a benefit for covered hospital admissions or stays
Life insurance – Designed to provide financial support to beneficiaries after a covered loss

You can mix and match based on what fits your workforce and your overall benefits strategy.

7. Employees Get to Choose What Works for Them

This is one of the best parts about voluntary benefits. Participation is optional.

Employees pick the coverage that fits their life. A single employee in their twenties might want something different than a working parent with three kids.

This flexibility leads to higher satisfaction. People feel like their individual needs are being considered: not ignored.

And when employees feel valued? They stick around longer.

8. Some Benefits Come with Tax Perks

Certain voluntary benefits qualify for pre-tax deductions under Section 125 of the IRS code. That means employees can lower their taxable income by participating.

Examples include:

Group term life insurance (up to certain limits)
Health Savings Account (HSA) contributions
Flexible Spending Accounts (FSAs)

This can add value for employees, but the tax treatment depends on the specific benefit, how your plan is structured, and IRS rules. Coordinate with your tax advisor or benefits counsel to confirm what applies to your organization.

9. Payroll Deductions Make It Easy

Worried about administrative headaches? Plan ahead and set clear processes.

Voluntary benefits are commonly funded through payroll deduction. Once employees elect coverage (when available), premiums can be collected through payroll, subject to your setup and carrier requirements.

This can help streamline administration for HR when eligibility, deductions, and vendor files are coordinated.

If you want help thinking through enrollment workflows (in-person, virtual, telephonic, or online self-service), we can walk through options and what may fit your organization.

10. One-to-One Benefits Counseling Changes Everything

Here’s a truth bomb: most employees don’t fully understand their benefits options.

They see a long list of choices during open enrollment and feel overwhelmed. So they either pick something random or skip voluntary benefits altogether.

That’s a missed opportunity.

One approach some employers use is one-to-one benefits counseling. This gives employees time with a benefits counselor who can explain available options and answer general questions.

This can help employees:

Understand what each benefit is designed to cover (based on plan details)
Compare choices against their budget and needs
Make more informed enrollment decisions

Results vary by workforce, timing, and communication. Avoid setting expectations around participation levels unless you have documented results for your specific group.

Why This All Matters

Voluntary benefits can be a practical way to round out your overall benefits strategy.

When designed and communicated well, they can help employees understand optional coverage choices and plan for potential expenses, without requiring you to change your core medical plan.

If you’d like a neutral review of options—what’s commonly offered, what’s employee-paid vs. employer-paid, and how enrollment can be set up—we’re here to help you evaluate what fits your organization.

Ready to Learn More?

This article was written by Erik Hill, a Colonial Life Independent Agent.

Contact Erik Hill, Colonial Life Independent Agent, for a neutral review of voluntary benefit options for your organization.

Insurance products have limitations and exclusions; availability varies by state; consult policy for details.