Benchmarking’s Role in Voluntary Benefits Program Design

Let’s discuss voluntary benefits and how benchmarking can help your organization design an attractive, cost-effective employee benefits program.

How well do you know your workforce? How well do you know the marketplace for prospective employees? And how effective is your organization’s benefits plan in addressing the needs and priorities of the people you want working with and for you?

Workforce variables

Alera Group’s Employee Benefits team recognizes that workforce composition varies from business to business, from industry to industry, from region to region. The needs and priorities of workers at a midsize agricultural manufacturer in the rural Midwest, for example, are likely to be different from the needs and priorities of workers in the hospitality industry in the rural Southeast. And, at a time when the U.S. workforce is more generationally diverse than ever before, even within a single company the needs and priorities of Generation Z employees are typically very different from those of Generation X.

This is where voluntary benefits — also known as supplemental, workplace or optional benefits — become so vital to an organization’s offerings strategy. 

Unlike mandatory benefits such as health insurance, voluntary benefits are typically paid for entirely by the employee, usually through payroll deduction and at a reduced rate compared to what is available for purchase individually through the open market. This enables employers to offer valuable coverages ranging from Life Insurance to gym memberships to Pet Insurance and more at group rates.

Benefits benchmarking

Alera Group’s Healthcare and Employee Benefits Benchmarking Reports take an in-depth look at the benefits businesses provide, the options they offer and the strategies they use to manage costs. Because market conditions and employee preferences can change rapidly — especially during times of economic upheaval — we publish a report annually, with our 2025 edition scheduled for release early this summer.

We derived data and analysis in the 2024 edition from responses to a nationwide survey encompassing more than 6,200 employers, 14,000 medical plans and more than 1 million employees. Key findings include: 

• Seventy-nine percent of group medical plans experienced a premium increase over the previous year.
• Among businesses with 500 or more employees, 55% switched to self-funding during the previous year.
• Eighteen percent of employers were offering five tiers of pharmacy coverage, an increase of 8% from 2023.(Benchmarking is also critical in determining a prescription drug formulary and managing costs, as we detailed in a previous Insights article, “Employee Benefits, Prescription Drugs and the Importance of Benchmarking.”)

Work on the 2025 report is well underway, with findings based on a similar number of participating businesses across the nation.

Core vs. voluntary/supplemental

Based on our previous survey, the 2024 report classifies six common offerings as “core insurance benefits” and seven as “supplemental insurance benefits,” with the former offered by half or more of participating businesses.

Core:

• Medical (99%)
• Dental (90%)
• Vision (80%)
• Life/Accidental Death and Disability (75%)
• Long-Term Disability (54%)
• Short-Term Disability (50%)

Supplemental:

• Accident (30%)
• Critical Illness (28%)
• Hospital Indemnity (16%)
• Pet (8%)
• Identity Theft (7%)
• Prepaid Legal (5%)
• Long-Term Care (97%)

Larger employers are more likely to offer supplemental/voluntary, benefits than smaller employers, the report notes, adding that smaller employers could increase the perceived value of their overall benefits program, given how positively employees view supplemental offerings.

As Alera Group’s vice president of voluntary benefits and enrollment services, Tina Santelli, says in the report, “Critical Illness coverage, Disability Income and Accident Insurance benefits provide a sense of financial security and peace of mind, and contribute to higher levels of job satisfaction and loyalty in today’s fiercely competitive job market.”

Hospital Indemnity Insurance appears to appeal to employees as well. Another Alera Group report, our 2025 Employee Benefits Market Outlook, details benefits “wants” across generations, with Generation Z, Millennials, Generation X and Baby Boomers all citing Hospital Indemnity at rates ranging from 25% to 31%.

Go deeper

For more on benchmarking and voluntary benefits, visit our Benefits Benchmarking webpage, where you can download the 2024 Healthcare and Employee Benefits Benchmarking Report and open an infographic highlighting key findings in the report. You may want to bookmark the page while you’re there — to have it handy when we add the 2025 Benchmarking Report.

VISIT THE BENEFITS BENCHMARKING PAGE