5 things to know about voluntary benefits compliance

Voluntary benefits offer employees the flexibility to customize their benefits package according to their individual needs and preferences, enhancing overall job satisfaction. Additionally, these benefits can contribute to a healthier work-life balance by providing access to valuable services such as wellness programs, financial planning, and insurance coverage beyond traditional offerings. But there are some voluntary benefits rules you need to follow to stay compliant. Keep reading to learn more about voluntary benefits compliance and how to design voluntary benefits at your company.

Employee eligibility

Employee eligibility for voluntary benefits is determined by the employer. You might choose for full-time employees to have access to a wider range of voluntary benefits than part-time or temporary staff, or you might establish a waiting period before employees become eligible. Regardless, it’s important to have a consistent approach when offering these benefits. 

Contribution rules

Voluntary benefits are extra perks that you can offer your employees at a discounted group rate, where employees contribute either fully or partially toward these benefits through deductions from their payrolls. You may choose to contribute a fixed percentage or a set amount toward certain voluntary benefits, but many voluntary benefits are funded entirely by employees so they can easily tailor their benefits package to their specific needs. 

ERISA and voluntary benefits 

The Employee Retirement Income Security Act (ERISA) was created to protect the rights and interests of workers who participate in employer-sponsored benefits plans.

Voluntary benefits are usually exempt from ERISA, as long as the employer does not contribute to the cost and participation is entirely employee-funded. Employers should be aware that they could be subject to ERISA if they take an active role in the administration or endorsement of their voluntary benefits programs, which is why it’s helpful to work with a third-party administrator for voluntary benefits management.

Types of voluntary benefits 

Multiple categories of voluntary benefits contribute to employees’ wellness needs. In the health category, voluntary benefits address additional healthcare needs beyond typical insurance, including critical illness, disability, and accident insurance, along with dental and vision options. Financial voluntary benefits include services like financial planning, student loan repayment programs, and investment advice, promoting employees’ financial wellness. And security voluntary benefits cover identity theft protection, life insurance, and legal support. 

There’s also a variety of personal voluntary benefits, including pet insurance, employee assistance programs (EAPs), car and travel insurance, and policies supporting remote or flexible work arrangements. When we surveyed our participants and asked them about the benefits they wished to learn more about, pet insurance emerged as the third most-requested topic.

Take a look at some of the most popular types of voluntary benefits from our WEX data pool:

Designing voluntary benefit offerings

Choosing what types of voluntary benefits to offer involves considering the diverse needs and preferences of your employees to create a well-rounded offering. Employers should look at the demographics and priorities of their workforce to select benefits that align with employee interests, such as wellness programs, financial planning services, and insurance options. The wide variety and customization behind voluntary benefits might seem overwhelming to employees, so it’s important to provide clear communication, education, and support to ensure employees fully understand and appreciate the value of their voluntary benefits offerings.

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The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own legal counsel, tax and investment advisers. 

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