As an employer, you are familiar with traditional benefits like health insurance, a 401(k) plan, and paid time off (PTO). You are familiar with voluntary benefits like dental and vision plans. But what about choice-driven and lifestyle benefits? Do you know what they are?
If Benefits Pro contributor Alex Frommeyer is right, they will be the most important benefits of 2023 and beyond. Frommeyer has said in no uncertain terms that 2023 will be there “year of the employee” in terms of how companies structure their benefit plans. He suggests both choice-driven and lifestyle benefits will take center stage.
To be clear, both choice-driven and lifestyle benefits our voluntary benefits. They are offered above and beyond traditional health insurance, PTO, etc. Choice-driven benefits are so named because they give employees choices. Simply put, an employer puts together a basket of voluntary benefits from which employees can pick and choose.
According to Dallas-based BenefitMall, three of the newest voluntary benefits employers are looking at include group accident insurance, identity theft protection, and pet insurance. All three can be offered at no cost to the employer, so they can be put into a basket along with other voluntary benefits. Those employees who want them can sign up for them.
Lifestyle benefits are benefits that apply more to an employee’s daily life than anything else. They include things like reduced rate gym memberships, reduced rate streaming services, and so forth. They are all benefits that contribute to the modern lifestyle.
According to Frommeyer, one of the easiest ways to offer a voluntary benefits basket that qualifies as both lifestyle and choice-driven is to offer employees a monthly stipend they can use in whatever way they see fit, within the scope of the basket.
An employer would start with a plan administrator. The administrator could be a benefits broker or a company that specializes in benefits administration. Through that administrator, the employer would set up on account that would be funded through monthly contributions. Each employee would be given a stipend from the total amount contributed. The stipend could be applied in any number of ways.
One month, an employee could use his stipend to cover his streaming subscriptions. The next month he could put the money toward his cell phone service. Another employee could designate her stipend be used for the same thing every month. Maybe it’s grocery delivery or childcare expenses.
Intangible Lifestyle Benefits
While a fair number of lifestyle benefits are tangible benefits, like stipends to pay for streaming services, some are intangible. A good example is a financial wellness benefit that gives employees access to everything from financial seminars to free retirement planning. The employer isn’t actually putting cash in the employee’s pocket. Instead, it is giving employees access to much needed help and advice.
For some employees, these sorts of intangible benefits are more important than their tangible counterparts. Financial wellness assistance is the perfect example. Today’s workers struggle with their finances because they have never been taught how to manage them. Give employees an opportunity to learn how to budget, save, invest, etc. and the chances are pretty good that they will take those opportunities.
If Frommeyer’s predictions turn out to be correct, voluntary benefits will have undergone quite an evolution by this time next year. The voluntary benefits of 2024 and beyond will be both choice-driven and centered around the modern lifestyle. Traditional health insurance and retirement plans will still be on the table, but companies are going to compete for new hires based on the strength of their voluntary packages.