Your employees are thinking about benefits more than you realize. A 2025 SHRM survey found that 83% of employees who rated their voluntary benefits package as excellent planned to stay at their company for at least three more years. Among those who rated benefits as poor, that number dropped to 41%.
The gap between those two numbers is the retention problem voluntary benefits solve — and the reason this guide exists.
This guide is for two audiences: employers who want to understand what voluntary benefits are and how to offer them, and employees who want to know what protections are available to them through their workplace.
What Are Voluntary Benefits?
Voluntary benefits are insurance products that employers make available to their workforce, with premiums paid by the employee through payroll deduction. The employer’s role is to negotiate group rates, handle enrollment, and make the options visible. The employee chooses what fits their life.
These are not employer-paid perks. They are accessible perks — group-rate options that individuals would pay significantly more for on the open market.
The most common voluntary benefits include:
- Critical illness insurance — a lump-sum payout (typically $10,000 to $50,000) upon diagnosis of cancer, heart attack, or stroke.
- Disability income insurance — replaces 60% to 70% of income if an employee cannot work due to illness or injury.
- Term life insurance — affordable group-rate coverage that protects a family’s financial future.
- Hospital indemnity plans — supplemental coverage that pays a fixed amount per day of hospitalization.
- Dental and vision plans — standalone or supplemental options that fill gaps in group health coverage.
- Accident insurance — covers medical expenses and income loss resulting from accidental injuries.
How Much Do Voluntary Benefits Cost?
One of the most common questions employers ask is what voluntary benefits actually cost. The answer depends on the benefit type, the number of employees enrolling, and the state where the business operates.
Here is a general cost range for common voluntary benefits:
- Critical illness insurance: $25 to $75 per employee per month, depending on age and coverage amount.
- Disability income insurance: $20 to $60 per employee per month for group-rate short-term disability.
- Term life insurance: $5 to $30 per employee per month for $50,000 to $250,000 in coverage.
- Hospital indemnity: $15 to $40 per employee per month for per-day hospitalization coverage.
- Accident insurance: $10 to $35 per employee per month.
The employer typically pays nothing. Premiums are deducted from employee paychecks through payroll. That is the core advantage — employees get group rates they could not access individually, and the employer absorbs no additional payroll cost.
For employers evaluating ROI: a single avoided turnover event (which costs 50% to 200% of annual salary) can pay for an entire voluntary benefits program for a mid-size team.
Why Voluntary Benefits Matter for Retention
Replacing a mid-level employee costs between 50% and 200% of their annual salary. A 10-person team with 20% annual turnover could cost an employer $300,000 or more in replacement costs alone.
Voluntary benefits do not eliminate turnover. But they give employees a reason to stay — not out of obligation, but because the benefits package genuinely supports their life.
- A 42-year-old employee with a critical illness policy knows that a cancer diagnosis will not mean financial ruin.
- A 35-year-old employee with disability income protection knows that a back injury requiring six months of recovery will not wipe out their savings.
- A 28-year-old employee with a $250,000 term life policy knows their spouse and children are protected.
How Employers Can Offer Voluntary Benefits
Step 1: Survey your workforce. Ask three to five questions about what coverage matters most.
Step 2: Partner with an independent agency. A multiline agency can bundle critical illness, disability, life, and hospital indemnity into a single package.
Step 3: Launch with an education campaign. Host a lunch-and-learn or run a webinar.
Step 4: Offer enrollment twice a year. Two enrollment windows per year increases participation.
Step 5: Track the results. Measure voluntary benefit enrollment alongside turnover rates.
What Employees Should Know
- Pick the coverage that matches your life stage.
- Group rates are significantly lower than individual market rates.
- Voluntary benefits supplement major medical — they fill the gaps.
Frequently Asked Questions About Voluntary Benefits
Are voluntary benefits the same as employee benefits?
Not exactly. Employee benefits (also called employer-sponsored benefits) are typically paid for partly or fully by the employer — think group health insurance, 401(k) matching, or paid time off. Voluntary benefits are offered through the employer but paid entirely by the employee through payroll deduction. The employer provides access to group rates; the employee decides what to enroll in.
What is the most popular voluntary benefit?
According to SHRM and benefit industry surveys, critical illness insurance and accident insurance consistently rank among the most popular voluntary benefits. Dental and vision supplemental plans also rank high, especially for employers whose core group health plan does not include robust dental or vision coverage.
Can employees keep voluntary benefits if they leave their job?
Generally, no. Voluntary benefits are tied to the employer’s group plan. When an employee leaves, the coverage typically ends at the end of the month in which employment terminates. Some plans offer conversion or portability options — employees should check their specific plan documents for details.
Do voluntary benefits affect an employer’s taxes?
Voluntary benefits paid through payroll deduction do not create a tax liability for the employer, since the employee funds them. The administrative cost of offering the benefits is a deductible business expense.
How do voluntary benefits differ from supplemental insurance?
The terms are often used interchangeably. Supplemental insurance is a type of voluntary benefit — it supplements (adds to) an existing group health plan. Critical illness, accident, and hospital indemnity are all forms of supplemental insurance offered on a voluntary basis.
What is ICHRA and how does it relate to voluntary benefits?
An Individual Coverage Health Reimbursement Arrangement (ICHRA) allows employers to reimburse employees for individual health insurance premiums on a tax-free basis. While ICHRA is not a voluntary benefit in the traditional sense, it pairs naturally with voluntary benefits — employers can offer an ICHRA for health coverage and layer voluntary benefits (critical illness, disability, life) on top for a complete, cost-controlled benefits stack. Trek Insurance Solutions helps employers design ICHRA-compatible benefits packages.
How Trek Insurance Solutions Can Help
Trek Insurance Solutions is a licensed, independent agency that helps employers design voluntary benefits packages tailored to their workforce. We work with employers across multiple states to build benefits stacks that retain talent without raising payroll costs.
Call 888-960-0442 or visit trekis.net to talk through your options.
Trek Insurance Solutions is a licensed, independent insurance agency. Coverage options, eligibility, and pricing vary by state and plan.