COVID-19 Continues To Drive Voluntary Benefit Trends

You don’t have to look into a crystal ball to realize that predicting voluntary benefit trends for 2021 will be heavily affected by COVID-19. The pandemic has changed our lives and our work, and likewise the employee benefits landscape.

Virtual care, mental health services, critical illness coverage, child care and financial well-being are among the needs and priorities for employees these days as they deal with pandemic reality.

Last fall, Purchasing Power conducted an informal survey of 93 human resource professionals to assess the impact that both COVID-19 and financial stress is having on their workforces. The survey asked about the financial challenges their employees were facing.

Employers reported the following circumstances:

» 81% said employees had a spouse or partner laid off or furloughed during the pandemic, so money is tighter than ever.

» 49% said employees had family or household members who contracted COVID-19 and there are unexpected medical expenses involved.

» 48% said employees had college-age children return from school and are back living at home.

» 34% said employees had extended family members out of work who needed financial support.

Voluntary Benefits Step To The Forefront

Because they can address many of the specific needs that employees have as they continue to struggle with and overcome pandemic challenges, voluntary benefits have now taken on a significantly more important role.

In recent years, voluntary benefits have seen more popularity as the products themselves have become more diversified and appealing to the multiple generations in the workplace. But then voluntary benefits have always been a win-win for employers and employees. For employers they are an excellent recruiting and retention tool, while employees see voluntary benefits as an opportunity to choose benefits that they need or want.

The impact of COVID-19 on employees’ lives and their finances really shone a spotlight on the value of voluntary benefits, which have given employers a way to meet the shifting needs and priorities of their workforce during this critical time.

In 2021, employers will continue to seek ways to expand voluntary benefit offerings in order to provide more customized options to meet workforce needs, whether that’s targeting traditional voluntary benefits or nontraditional ones for lifestyle, personal wellness and financial health.
What trends can we expect this year for voluntary benefits?

Growth Spurt

Over the past decade, voluntary benefit sales have grown at a compounded annual growth rate of 5% a year while employer-paid benefits declined, according to Moody’s Investors Service.

In the voluntary benefits space, traditional insurance-related products such as supplementary life insurance, disability income and dental accounted for more than 60% of total 2019 sales.

However, Moody’s reports nontraditional voluntary benefits such as pet insurance, elder care and student loan services programs have gained traction — particularly with younger buyers, who prefer the increased choice and customizable options.

Look for a jump in the growth rate in 2021 as employers expand their offerings and as employees choose voluntary benefit options as a go-to to help them face financial challenges as a result of COVID-19.

Benefits For Financial Well-being

One critical piece of pandemic disruption that employers can’t overlook is their employees’ financial situation. For many employees, COVID-19 certainly drew attention to their fragile financial condition. In September, 84% of Americans told a Harris poll that the COVID-19 outbreak was causing stress on their personal finances. And 39% told that same poll they will feel “very/somewhat worried” about their financial situation 12 months from now.

As a result of the impact the pandemic is having on their finances, 50% of people told a SoFi survey they feel it is more important now that employers offer financial wellness benefits. And when asked what their employer could do to have the most significant impact on their personal financial situation, they said, “Make a contribution to my rainy-day fund/emergency savings account.”

While employees continue to look for ways to stretch their paycheck and recover from the financial hardship of the pandemic, voluntary benefits such as employee purchase programs, bill payment programs, medical deductible financing, financial counseling and student loan repayment benefit programs will get more attention. It’s also likely we will see more financial wellness and well-being products introduced this year.

More Benefit Customization

Being able to pick and choose benefits that are important to them has always been the attraction of voluntary benefits for employees. Because of the pandemic, many voluntary benefits will stand out as options for these times.

We’ll see employees paying more attention to benefits that they might not otherwise have found as important or needed pre-pandemic, such as pet insurance, identity theft protection, legal insurance and employee purchase programs. With more people working from home, an increase in pet adoptions is making pet insurance a highly requested voluntary benefit. Because cash and credit are not always readily available, the ability to purchase home office and workout equipment or needed appliances through the convenient payroll deduction system of an employee purchase program can be an invaluable benefit.

As a result of the pandemic, we can also expect more interest in critical illness insurance and mental health benefits. A recent Mercer survey revealed that 22% of employers are enhancing voluntary benefits such as critical illness insurance, and 20% are adding or improving behavioral health care benefits.

More Employee Interest

The pandemic has forced many employees to look for resources and assistance they may never have thought about previously. Pre-pandemic, when open enrollment time rolled around and the entire employee benefits package needed review, it was often easy for employees to overlook some benefits.

For the enrollment season that just ended, nearly 7 in 10 employees (71%) planned to spend more time reviewing their voluntary benefits as a result of COVID-19 than they did for 2020, and more than half (53%) planned to make changes to their benefits coverages, Kiplinger’s reported.

Now that employees have begun to pay more attention to voluntary benefits, we’ll see that trend continue in 2021. Additionally, we’ll see employers scheduling more off-cycle benefit enrollments, especially for new voluntary benefits, in order to provide employees additional options that help with parts of their lives affected by the pandemic.

This year, voluntary benefits will become an even more personal choice for employees as they continue to navigate the effect the pandemic has had on their financial situation. Being able to pick and choose products to meet their individual needs will be a lifeline for many who are still recovering.