What are voluntary benefits? Guide for employers

Competitive salaries attract top talent, but great employee benefits make people want to stay. A comprehensive benefits package is the key to boosting morale and productivity in any business, no matter the size. While you must offer mandatory benefits as federal and state law requires, voluntary benefits like vision and dental insurance can round out your compensation package. When it comes to building an exceptional team, offering superior perks and benefits helps your company stand out from the crowd when recruiting and keeps your workforce happy and engaged in the long run. 

In this guide, you’ll learn what you need to know about voluntary benefits for employees—what they are, why they matter, and how to set up a voluntary benefits plan for your company.

What are voluntary benefits?

Voluntary benefits are additional perks offered by employers to elevate employee compensation packages. These benefits are typically provided at discounted group rates and are paid for by employees through payroll deductions, although employers can choose to split costs. Unlike mandatory benefits, such as unemployment insurance, workers’ compensation coverage, and Affordable Care Act (ACA) mandated health coverage, voluntary benefits are optional and tailored to meet individual preferences and needs.

Employers use voluntary benefits to provide employees with access to services like supplemental health insurance, wellness programs, financial planning tools, and professional development opportunities. These packages and plans allow employees to enjoy cost savings while benefiting from vetted providers and flexible coverage options. Voluntary benefits like gym memberships or employee assistance programs (EAPs) promote well-being, while money management coaching or student loan repayment programs can offer long-term financial security.

By including voluntary benefits in your compensation strategy, your employees gain access to valuable resources, and you enhance your ability to attract and retain quality hires, often without incurring significant expenses.

Types of voluntary benefits

Employers can choose from an array of voluntary benefits to offer their employees. Here are some of the most common types of benefits: 

Hospital indemnity insurance

Hospital indemnity insurance helps cover expenses incurred during hospital stays, including those not typically covered by standard health insurance plans. This may include costs like deductibles, co-pays, and prescription drugs.

Dental insurance

Dental insurance provides coverage for routine dental care and common procedures like crowns and dentures. It’s a popular way for employees to afford oral health services. 

Vision insurance

Vision insurance helps cover expenses for eye exams, glasses, and contact lenses. Some plans will cover laser eye surgery. 

Pet insurance

Not only does voluntary insurance for pets cover veterinary expenses like check-ups and emergencies for your employees' furry friends, it also shows that you support their personal lives outside of the office.

Student loan payment programs

Student loan repayment programs are growing in popularity, especially amongst young workers struggling to pay their education loans. These programs help employees tackle their student debt by offering repayment assistance or financial contributions. 

Mortgage Insurance

Mortgage protection insurance offers financial protection for employees who are unable to make their mortgage payments due to unforeseen economic circumstances. These kinds of financial wellness benefits support your employees’ financial stability. 

Wellness stipends

Wellness stipends, sometimes called wellness spending accounts, enable employees to save for and spend on health and wellness services. These include various physical and mental health expenses like gym memberships, therapy consultations, and meal delivery. Wellness benefits can encourage employees to adopt a healthier lifestyle. 

Identity theft protection

Identity theft protection benefits are growing in popularity as our lives move online. They help protect your workforce from financial losses due to fraud and scams. Protection typically includes fraud alerts, identity theft insurance, and credit monitoring.

Benefits of voluntary benefits for employees

Because voluntary benefits are optional, your employees can customize your offerings to their needs. Other advantages include: 

• Enhance their overall health and well-being: By accessing supplemental health benefits such as dental and vision care, employees gain the tools to improve and maintain their health. 
• Handle personal finances more effectively: Financial benefits like mortgage insurance and student loan repayment assistance help your employees manage debt and enable them to improve their financial stability. 
• Reduce stress from external responsibilities: Most employees have worries outside of the workplace that can impact their ability to focus. Benefits that reduce or eliminate these worries, like disability, identity theft protection or pet insurance, can help them stay engaged at work.
• Save on various products and services: Voluntary benefits provide employees with access to discounts on a range of services, including wellness programs, legal assistance, and even gym memberships.
• Offer custom solutions for unique employee needs: Programs like wellness stipends allow employees to address their individual personal goals.
• Improve work-life balance: Lifestyle benefits, such as meal delivery services, can help busy employees manage their demanding schedules.

Benefits of voluntary benefits for employers

Not only do voluntary benefits support employees, but they also bring measurable benefits to your business, including:

• Enhanced employee satisfaction and retention: Voluntary benefits provide your workforce with coverage that fills the gaps in standard insurance plans. Employees can customize their benefits to fit their personal needs, leading to increased well-being and loyalty.
• Strengthened company culture and employee engagement: Offering your employees a robust selection of quality voluntary benefits shows that you value them. Employees who feel appreciated and supported are far more likely to be engaged, which leads to a more positive workplace culture. 
• Competitive advantage in recruitment: Salary isn’t the only factor in attracting the best talent. A compensation package that includes quality voluntary benefits can make all the difference in a competitive recruiting environment. When candidates are deciding which offer to accept, comprehensive benefits often play a critical role in their decision.
• Increased employee productivity: Employees who take advantage of voluntary benefits for health, disability insurance, and financial coverage experience less stress, knowing they're protected. Fewer worries lead to increased focus and productivity.
• Cost-effective expansion of benefits: Voluntary benefits allow employers to augment their perks without significant cost increases. Since many of these programs are employee-paid, they provide value without significant additional costs for the employer.

How to set up a voluntary benefits plan in 6 steps

Creating a voluntary benefits plan requires thorough planning and collaboration. Here are six steps to guide you through the process:

Step 1. Reach out to current brokers or benefits providers

Begin by getting in touch with your existing brokers or benefit providers to see which additional benefits they offer. Your current plan may already include optional benefits you didn’t know about or offer voluntary benefits as add-ons to existing plans. This can make implementation much easier and may lower the costs of adding voluntary benefits. Enquire about your available options, eligibility criteria, and pricing. 

Step 2. Explore new broker or benefits provider options

If you find that your current provider is unable to offer the fringe benefits you require, research the offerings of other brokers or providers. Compare their packages, prices, eligibility requirements, and support. Consider providers who are familiar with your industry and can customize plans based on your specific situation and needs.

Step 3. Collaborate with leadership and management teams

Include leadership and management teams at the beginning of the process to ensure buy-in. Discuss how a voluntary benefits plan can support organizational objectives like cost management, workforce engagement, and employee retention. Leadership involvement is critical to moving forward with implementation.

Step 4. Gather employee feedback through surveys

Involve your employees by conducting surveys to better understand their benefit preferences and priorities. Ask them which benefits they value most, such as supplemental health coverage or wellness perks. Include details on potential costs, coverage options, and any tax benefits they may be eligible for. This feedback ensures that your final benefits offerings meet employee needs, which helps increase participation in voluntary plans. 

Step 5. Solicit proposals from potential providers

After narrowing down potential providers, request detailed proposals that outline their pricing, terms of service, and admin support during implementation. Scrutinize these proposals carefully to make sure they meet employee needs and company objectives. 

Step 6. Implement your voluntary benefits plan

Work with your HR team to roll out the plan. Provide employees with detailed information about the voluntary benefits, including their costs and how to access them. Make sure all resources are easily accessible for ongoing reference.

How to choose which voluntary benefits to offer

Picking the right voluntary benefits to offer your employees can boost workforce satisfaction, increase retention, and attract better candidates for future openings. These are the most important areas to consider when deciding which benefits to offer.

Assess employee needs and preferences

Understanding what your employees want is fundamental to creating a successful benefits package. Surveys, focus groups, and informal discussions can help you understand their preferences. You may find that not everyone wants the same thing. Older workers, for example, may prefer supplemental health benefits. Younger employees may opt for benefits like student loan repayment programs or fitness and wellness options. Tailoring your benefits to the unique needs of your workforce will ensure relevance and participation. 

Evaluate cost and budget considerations

It’s important to balance cost and value when introducing any non-mandated benefits. A significant portion of the cost of voluntary benefits is, by their nature, borne by your employees. Look at the financial feasibility of different benefit options by comparing direct costs with potential long-term returns, like improved engagement and reduced turnover. Consider budget-friendly options that provide voluntary or supplemental benefits your employees genuinely want.

Align benefits with company goals and culture

Voluntary benefits should reflect your company’s mission and values. Let’s say your organization emphasizes wellness. In this case, offering mental health benefits or gym memberships would be a great fit with your company’s culture. By aligning benefits in this way, you can better reinforce your corporate culture and support your employees.

Assess competitors

Evaluate what similar companies in your industry are offering to stay competitive in attracting and retaining talent. This helps identify gaps in your offerings and provides inspiration for innovative benefits that can give your company an edge. 

Monitor utilization and adjust offerings

Track employee participation in voluntary benefits programs to assess their effectiveness. Regularly seek feedback to understand what works and what doesn’t. Make adjustments as needed. This approach ensures your benefits stay relevant and valuable to your workforce.

Communicate and roll out effectively

A well-planned communication strategy helps employees understand your voluntary benefits, associated costs, and how to access them. Use various channels, including email, newsletters, and informational meetings, to share details about your benefits packages. Be sure to highlight the advantages of your plans in a relatable way. Clear communication during enrollment periods will increase participation.

Cost of voluntary benefits

Voluntary benefits are an affordable way for employers to offer additional employee perks without significant investment. Typically, the direct costs of voluntary benefits are minimal, as they are usually fully paid by employees. Employers may need to cover some small expenses (see below); however, the cost-effective implementation of voluntary benefits makes them an attractive option for businesses looking to improve employee engagement while keeping costs under control.

For employees, the cost of voluntary benefits varies depending on the specific coverage selected, factors like age or medical history, and whether family members are included. Group coverage plans are usually more affordable, and employees can pick and pay for the benefits that are best suited. 

Several factors influence the overall cost of voluntary benefits for employers:

• Setup fees: Some providers may charge small fees for implementing a voluntary benefit program.
• Administrative expenses: Employers may need to provide resources for overseeing enrollment, payroll integration, and ongoing communication with employees. 
• Employee participation: Higher participation rates can often result in better pricing or discounts from providers.

Easily manage voluntary benefits with Rippling

Rippling's benefits administration software consolidates all your benefits—voluntary, medical, FSA, HSA, dental, 401(k), and more—into one system, automating enrollment, deductions, and administration. 

If you're looking to streamline your benefits administration, Rippling is designed to make your plans and voluntary options more accessible and easier to manage for both you and your employees.

Rippling works with any broker of your choice—whether that’s your own broker or ours—to select new plans or maintain your existing plan. ​​Quote, compare, and enroll in more than 4,000 plans from the nation’s leading carriers. You can even give your broker access to Rippling for additional guidance when choosing new coverage.

Already offering benefits? With Rippling, you can connect your current coverage in seconds, maintaining your existing plans and pricing. Employees don’t need to re-enroll, change benefits, or update information. And when you onboard new hires, Rippling immediately invites them to enroll in benefits, and makes sure they only see the plans they are eligible for, providing an easier experience for everyone involved.

Rippling simplifies the open enrollment process, allowing you to view employee enrollment progress against deadlines, send group reminders and alerts, and see how often benefit plans are being used.

Worried about compliance? Rippling automatically handles your company’s ACA and COBRA compliance work, like sending ACA notices and handling COBRA payments on your behalf. We keep track of all federal, state, and local policies, so you can rest easy knowing your workplace is always up to code.Rippling simplifies benefits administration by unifying all aspects of employee benefits, including plan selection, broker management, payroll, and HRIS into one seamless platform.

Voluntary benefits FAQs

Is voluntary health insurance worth it?

Voluntary health insurance offers significant value for both employers and employees. Plans often include accident, critical illness, and hospital indemnity coverage, supplementing traditional health insurance by protecting employees from unexpected, high medical costs. This added coverage offers extra protection and alleviates the stress of dealing with sudden medical expenses.

For employers, voluntary health insurance is cost-effective since employees typically cover the cost through payroll deductions. It’s a win-win: employees gain valuable, affordable extended medical coverage, while employers can provide an attractive perk without a heavy financial burden.

Which two are considered the most common forms of voluntary benefits?

Dental and vision insurance are the most common voluntary benefits sought by employees and offered by employers. These supplemental health benefits are attractive because they cover many healthcare needs that standard health plans may not. Dental care typically covers common costs related to preventative care and treatments, while comprehensive vision coverage includes eye exams, glasses, contact lenses, and, in some cases, laser surgery. 

How do voluntary benefits impact employee retention?

Voluntary benefits are critical to employee retention and engagement. A strong benefits package shows that your organization cares about your team and their well-being. Superior benefits not only attract great talent but also encourage them to stay. Many voluntary benefits, like pet insurance and wellness perks, create a supportive environment both inside and outside the workplace. This helps boost employee engagement while helping reduce turnover rates and associated costs.

Which voluntary benefits are gaining popularity?

Some employers offer voluntary benefits that go beyond traditional options. From identity theft protection to fertility treatments, these modern benefits appeal to the needs of today’s employees. Packages combining innovative perks and traditional benefits can help organizations stand out in a competitive job market, attract top-tier candidates, and promote long-term employee engagement.

What is voluntary life insurance?

Voluntary life insurance, also known as a voluntary life plan, is an optional life insurance policy offered by organizations as part of their benefits package. Employees can choose to enroll and pay premiums, typically deducted from their paycheck, to secure a death benefit for their beneficiaries.

Are voluntary benefits considered standard employee benefits?

Voluntary benefits are often part of the broader employee benefits definition used by employers to describe total compensation beyond salary.

This blog is based on information available to Rippling as of April 11, 2025.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.