Voluntary Benefits

Voluntary benefits are extra perks that companies offer employees in addition to the essential benefits required by law, like health insurance and retirement plans. Unlike the mandatory benefits that are part of every employee's compensation package, these benefits are optional, meaning employees can choose whether to opt into them or not. In 2025, these benefits have become a key part of employer strategy, helping businesses attract and retain talent without drastically increasing costs.

They cover a wide range of options, from insurance products like critical illness insurance or life insurance, to lifestyle perks such as pet insurance, legal assistance, or even wellness programs. An employer typically gives their employees a list of voluntary benefits to choose from, usually at a discounted rate or sometimes for free. If there is any excess, the volunantary benefit cost is covered by the employee, either through payroll deductions or paid directly, once they opt in.

These benefits give employees the flexibility to tailor their benefits package to their needs, whether they want added protection for their health, financial peace of mind, or just a little extra support for their personal lives. They’re also a great way for employers to go beyond the basics and show global teams they’re valued, without breaking the bank.

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What Voluntary Benefits Do Employers Commonly Offer?

Back in the day, employee benefits were pretty straightforward. Set your team up with a basic retirement plan, a bit of health coverage, and maybe a life insurance policy. Throw in a decent pot of coffee at the office and you had a simple formula for keeping employees happy.

Bu times have changed. Nowadays, benefits packages have evolved into something much more diverse and dynamic, reflecting the varied needs of today’s workforce. Employees now want more than just the essentials. They’re looking for options that support their personal health, work-life balance, financial goals, and more – enter voluntary benefits. For employers, understanding this need and creating competitive compensation packages doesn’t have to break the bank.

Let’s take a look at a few examples of what voluntary benefits are being commonly offered by employers today:

Accident Insurance

Accident insurance is one of the most common elements of a voluntary benefits plan, offered by 75% of U.S. employers. This benefit pays out a lump sum if an employee suffers an injury, whether it’s a broken leg, a concussion, or an accident requiring an emergency room visit. For employees, it offers a safety net that helps them manage the unexpected financial burden of medical bills, especially when health insurance doesn’t cover the full cost.

This coverage is particularly useful for employees who may not have substantial savings or for those on high-deductible health plans where out-of-pocket costs can add up quickly. With accident insurance, employees can avoid worrying about how to pay for unexpected medical expenses, allowing them to focus on recovery instead of the financial strain of an injury. For employers, offering accident insurance is an affordable way to provide a meaningful benefit that can truly make a difference in employees' lives during tough times.

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Critical Illness Insurance

With 70% of employers including a critical illness insurance benefit in their benefits packages, it’s clear that more companies are recognizing the importance of helping employees manage the financial impact of a serious health crisis.

This insurance pays out a lump sum if an employee is diagnosed with a major illness, such as cancer or a heart attack. It helps employees cover out-of-pocket medical expenses, treatment not covered by their regular health insurance, or even day-to-day living costs if they need to take time off work to recover. For many employees, the financial burden of a critical illness can be just as challenging as the illness itself, and this insurance provides a much-needed safety net.

For employers, offering critical illness insurance is a proactive way to support employees through life’s toughest challenges, without them having to choose between their health and financial stability. It’s a low-cost benefit that can have a significant impact on employee well-being.

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Hospital Indemnity Insurance

Hospital indemnity insurance provides employees with a fixed daily benefit if they are hospitalized due to illness or injury. Unlike traditional health insurance, which typically covers a percentage of medical expenses, hospital indemnity insurance offers a predetermined cash payout that is paid directly to the employee.

This benefit can be especially useful when it comes to covering deductibles, co-pays, and other out-of-pocket expenses that may not be fully covered by a regular health plan. For example, if an employee requires an extended hospital stay, this benefit can help cover non-medical expenses like transportation costs, childcare, or even lost income due to missed work while they recover.

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Pet Insurance

More and more employers are offering pet insurance, recognizing that for many employees – particularly Millennials and Gen Z’s – pets are viewed as family members. For some in fact, pets often take the same level of importance as children when it comes to care and attention. Pet insurance helps employees cover a range of costs, from routine check-ups to unexpected emergencies, like when a pet swallows something it shouldn’t or has an accident. If you’re looking to attract or retain younger talent, this is a great addition to your compensation package.

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Life Insurance

Many employers now offer supplemental life insurance, which allows employees to increase their coverage beyond what is provided through the company’s basic life insurance plan. Often available at group rates, this option gives employees an affordable way to ensure their families are financially protected in the event of an unexpected tragedy. For employees, it’s a way to take control of their financial future and make sure their loved ones are covered without the high premiums typically associated with individual life insurance plans.

For employers, offering supplemental life insurance is an effective way to improve your benefits package. As life insurance is a relatively low-cost benefit, it adds real value to employees without a significant investment from the employer.

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Student Loan Repayment Assistance

While student loan repayment assistance isn’t a very common benefit, it has been gaining some traction since the SECURE Act 2.0 was passed. More employers are now offering this benefit, helping employees pay off their student debt – sometimes even matching contributions to speed up the process. With student loan debt still being one of the biggest financial burdens for so many people, this benefit goes a long way in supporting employees' financial stability and peace of mind.

Offering this benefit is a great way to provide practical support while helping employees get on a solid footing for the future.

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Legal Assistance

Legal assistance is becoming a highly valued benefit, offering employees access to services such as will drafting, minor legal issues, and even legal consultation. This can be especially helpful for employees who don’t have easy access to affordable legal services.

This benefit can be a huge draw for employees, especially for those who might otherwise put off important legal matters due to cost or lack of access.

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Wellness Programs

As companies recognize the connection between employee health and productivity, wellness programs are becoming a staple in benefits packages. These programs can include gym memberships, mental health support, nutrition counseling, and other resources aimed at improving overall well-being. Wellness benefits are shown to reduce stress, improve focus, and increase job satisfaction, making them a valuable addition to any benefits package.

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Employee Assistance Programs (EAPs)

Employee Assistance Programs (EAPs) provide crucial support for employees facing personal challenges, such as financial stress, mental health issues, or family difficulties. EAPs often include confidential counseling, legal advice, and financial planning, giving employees the resources they need to navigate many of life’s tough situations.

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Flexible-Work Stipends

As remote and hybrid work models become standard expectations rather than exceptions, many employers are offering flexible-work stipends to help employees create productive and comfortable home office environments. These stipends can cover expenses like home-office equipment, phone bills, or internet charges. For employers, it also helps in retaining talent by providing the necessary resources to work effectively from home.

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Why Should Companies Offer Voluntary Benefits

It’s no longer just about the basics or even work-life balance. People are looking for a sense of community and some semblance of balance in the places they work. Offering voluntary benefits can help create a work environment where this is possible, ultimately because it promotes work-life integration over balance.

Voluntary benefits really make a difference in the overall culture and happiness of your team, and with the job market becoming more competitive by the minute, offering a range of voluntary benefits is a great way for your company to stand out from the noise on the global stage.

Here’s why it matters:

• Employee Satisfaction: Offering benefits over and above salary helps create a positive atmosphere where your team feels valued. Happier employees are more engaged employees, and engaged employees produce better outputs.
• Employee Retention: Offering great voluntary benefits will make your company a place where people want to stick around for the long haul, saving you the cost of high turnover.
• Morale and Engagement: Benefits like mental health programs, gym memberships, or even student loan repayment assistance boost morale and create a sense of community.
• Recruitment: In today’s job market, great benefits can be a huge draw for top talent. Offering voluntary benefits helps attract people who share your company’s values and culture, making it easier to recruit the right people for your team.

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How and When to Offer Voluntary Benefits

When it comes to adding voluntary benefits to your company’s benefits package, the key is to make sure you’re offering something that genuinely resonates with your employees while also aligning with your company’s goals.

Here’s how you can get it right:

1. Employee Needs Assessment: Understand What Matters Most

Before you start selecting benefits that you would love, stop, take a step back, and remember that the whole point of these benefits is to help your employees. Meaning they need to be relevant and valuable to them.

Consider using tools like:

• Surveys: A simple, anonymous survey can give you a great pulse check on what your employees are most interested in. Ask about their priorities, whether it's health and wellness, family-related benefits, or financial assistance.
• Focus Groups: If you want more in-depth insights, gather a small group of employees from different departments to chat about what benefits would truly make a difference in their lives.

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2. Customization: Tailor Benefits to Your Workforce

Just like every country, every workforce is unique. Offering a one-size-fits-all package might not meet the diverse needs of your employees, especially if yours is global. Instead, consider customizing your voluntary benefits to match the culture, values, and demographics of your team.

For example:

• If your team is mostly younger employees, offering student loan repayment assistance or pet insurance might be well-received.
• If your company culture emphasizes well-being and balance, consider offering mental health support or fitness-related benefits.

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3. Clear Communication: Make Sure Everyone Knows About It

Even the best benefits are useless if employees don’t know about them! Clear, consistent communication is the key to making sure that everyone understands the benefits available to them and how to access them.

Use a variety of channels to get the message across:

• Email Announcements: Send a clear and simple email when you first roll out benefits, explaining what they are and how employees can opt into them.
• Company CMS: Create a dedicated page on your company internal task manager where employees can learn more about each benefit and how to sign up.
• Employee Meetings: Consider holding a meeting or a webinar to walk employees through the benefits and answer any questions they may have.

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4. Evaluation and Feedback: Keep Improving

Once you’ve rolled out your voluntary benefits package, it’s important to track its effectiveness and gather employee feedback regularly. Offering these benefits is just the beginning. The real value comes when they are continuously refined to meet employee needs.

• Conduct Regular Surveys: Ask employees how the benefits have impacted their day-to-day, job satisfaction, or overall well-being. What do they like? What would they change?

• Review Participation Rates: Track how many employees are using each benefit and if there’s a trend in the types of benefits that are most popular. This data will help you understand what’s working.
• Adapt and Update: Use feedback to adjust your offerings as needed. For example, if employees express interest in a particular benefit (like family-building support), consider adding it to the package.

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5. Flexibility: One Size Does Not Fit All

Offering flexibility in your voluntary benefits is key to addressing the diverse needs of your workforce. Not every employee will need the same benefits, so giving them the ability to choose what works for them can increase both engagement and satisfaction. Here’s how:

• Benefit Allowances: Provide employees with an allowance or credit to spend on benefits that matter most to them. This way, they can pick and choose the benefits they need.
• Multiple Options: Offer several options within each category. For example, some employees might prefer gym memberships, while others may want access to mental health counseling. Giving them the freedom to choose can make them feel more in control of their benefits package.

Offering voluntary benefits is an investment, not just in your employees’ happiness, but in your company’s success. Keep listening, stay flexible, and make sure your employees know you’ve got their back.

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Understanding the Tax Impact of Offering Voluntary Benefits

If you’re hiring internationally or managing a global team, be prepared for the fact that every country treats employee benefits and perks differently for tax purposes. What counts as a non-taxable benefit in one region might be fully taxable in another, and vice versa.

If you have a globally distributed team, managing this can get complex quickly – you’ll need to stay on top of multiple tax regions. Each time you add a benefit for an employee, you should ask:

• Will this perk be taxed as income for them?
• Will it trigger an employer tax for me?
• Is there a cap or special reporting required?

Failing to handle this properly will more often than not result in incorrect payroll withholdings, unhappy employees with surprise tax bills, or penalties for your company. It’s a lot to juggle, but this is where having the right tools and partners makes all the difference.

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