--- title: "What Are Voluntary Benefits and Why Are They Important? | ADP" description: "It’s difficult to keep track of voluntary benefits for employees, even for small businesses. Learn the process and how it benefits a company and its employees." --- FAQ # What are voluntary benefits? Looking for benefits that can help attract and retain talent? [Talk to Sales](#) Voluntary benefits are services or products offered by employers to their workers, often at discounted rates, as a perk of employment. As the name implies, participation is optional, though many employees find voluntary benefits to be especially attractive. Those who do opt in typically share in the cost with their employer via [payroll deductions](/resources/articles-and-insights/articles/p/payroll-deductions). Table of Contents - [Types of voluntary benefits](#p1) - [How do voluntary benefits integrate with an overall benefits program?](#p2) - [How employers and employees benefit from voluntary benefits](#p3) - [The cost of voluntary benefits](#p4) - [How to set up a voluntary benefits plan](#p5) ## Types of voluntary benefits There are many kinds of voluntary benefits available today. Some that employers often find to be the most valuable when it comes to [talent acquisition](/what-we-offer/talent/talent-acquisition) and retention are: - **Health and wellness** May include health insurance, vision insurance, dental insurance, life insurance, supplemental disability insurance, gym memberships - **Financial wellness** May include financial counseling, student loan repayment programs, mortgage protection insurance - **Personal benefits** May include pet insurance, travel insurance, car insurance, employee assistance programs (EAPs), legal counseling, discounted goods and services - **Security** May include identity theft protection, homeowners’ insurance, home security installation discounts ![Build a better employee benefits program to attract and retain talent](/-/media/adp/resourcehub/rh2/images/promos/betterbenefits-promo-inline.jpg?rev=e44963430ac7431491a07dbfec6bd799&hash=F694A01153C5479C7141EDECBB6DF071) Build a better employee benefits program to attract and retain talent [Download Now](/resources/articles-and-insights/articles/b/build-a-better-employee-benefits-program) ## How do voluntary benefits integrate with an overall benefits program? Some voluntary benefits, like life insurance, are considered table stakes, while others, such as pet insurance, may be considered fringe benefits. So, how might [employers integrate benefits](/resources/articles-and-insights/articles/s/small-business-employee-benefits) from both ends of the spectrum into a comprehensive package? Here are some tips: - **Involve all members of the HR team** HR team members tend to be more aware of voluntary benefits that are payroll deductions than those that are not. However, it’s important for them to understand all the employer-sponsored perks and how each functions, even if they don’t manage them directly. This way, they can field employee inquiries and help them get the most out of the benefits available to them. - **Communicate with employees** Businesses should advertise voluntary benefits and make them easily accessible or employees won’t know about them or use them. To improve participation rates, employers often will include information about benefit programs in their new hire materials or put links to relevant sign-up pages on the company’s Intranet site. As an added bonus, the more knowledge employees have about benefits and how to access them, the less HR teams are burdened with questions. - **Integrate payroll and benefits** Employers who want to make benefits administration as seamless as possible often work with a [payroll service provider](https://www.adp.com/what-we-offer/payroll.aspx). Many, like ADP, are capable of integrating payroll and benefits so that employee contributions can be automatically deducted from their pay. ## How employers and employees benefit from voluntary benefits When employers offer great voluntary benefits and employees make use of them, everyone usually comes out ahead. ### How employees benefit Voluntary benefits can enhance employees’ quality of life either directly or through the promise of future security. Depending on the specific package, plan participants may be able to: - Improve their health and wellness - Manage personal debts better - Alleviate pressures outside of work - Save money on products or services ### How businesses benefit When employees are healthy and happy, they tend to be more productive and less likely to take unscheduled time off. Voluntary benefits can also serve as a passive recruitment and retention tool if employees have positive experiences and share them with others inside and outside the organization. ## The cost of voluntary benefits Some benefits, like retirement savings plans or health insurance, may require a significant investment on behalf of the employer. Fringe benefits, on the other hand, are usually a minimal business expense. There may be small set-up or administrative fees, along with the labor cost of rolling out and communicating the benefits to employees. Employers can sometimes even negotiate discounts with certain product and service companies just by directing their employees to them. The cost for employees varies widely, too, depending on the type of benefit and any associated premiums. But because participation is optional, employees have the flexibility to mix and match the benefits they want and can afford. ## How to set up a voluntary benefits plan 1. **Contact existing brokers or benefits providers **Employers who have already purchased [business insurance](/what-we-offer/benefits/business-insurance) or [group health coverage](/what-we-offer/benefits/group-health-insurance) should ask their provider if they offer other benefits. In some cases, their existing plan may include benefits they weren’t aware of or they can buy add-on services. 2. **Research new brokers or benefits providers **By searching the Internet or contacting providers directly, employers can compare offerings, eligibility requirements and pricing. 3. **Meet with fellow leaders and managers **Buy-in from executive leadership and key stakeholders is essential to launching a voluntary benefits plan. 4. **Survey employees **Knowing which benefits are most preferred by employees can help guide the decision-making process. Include the costs and any potential tax savings they may be entitled to for each benefit in the survey. 5. **Request proposals **Once the list of benefit providers has been narrowed, ask about the providers’ terms of service and how much administrative assistance will be available during rollout. 6. **Debut the voluntary benefits plan **With the aid of printed materials and dedicated Intranet pages, HR teams can announce the launch of new benefits and how employees can access them. ## Frequently asked questions about voluntary benefits ### What are considered voluntary benefits? Voluntary benefits are any perks provided by an employer that employees may choose to participate in or decline. Examples may include pet insurance, paid disability, tuition assistance, etc. ### What are voluntary rates? Voluntary rates are what employers and employees pay for benefits. Group rates are generally cheaper than what employees would pay for the same services on their own. ### Are voluntary benefits tax deductible? Certain voluntary benefits that fall under Section 125 of the IRS code, such as group term life insurance or HSA contributions, may be deducted pretax and therefore may lower an individual’s taxable income. Other types of benefits can only be deducted post-tax. ### Why do employers offer voluntary benefits to their employees? Voluntary benefits allow employers to cover gaps in group health insurance, which in turn, can help workers stay healthy and on the job. Special perks also may also attract new talent and keep existing employees engaged and productive. ### Do employees want voluntary benefits? Even if they decline to participate, employees usually appreciate when their employer offers voluntary benefits. As such, these perks work well as recruitment and retainment tools. _This article is intended to be general in nature. It should be used as a starting point in analyzing voluntary benefits and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter, which is provided with the understanding that ADP is not rendering legal or tax advice or any other professional services. You should seek guidance from your personal business advisor(s) if you need specific advice for your business._ _All insurance products will be offered and sold only through Automatic Data Processing Insurance Agency, Inc., (ADPIA) or its licensed insurance partners, 1 ADP Blvd. Roseland, NJ 07068. CA license #0D04044. Licensed in 50 states. All services may not be available in all states. ADPIA is an affiliate of ADP,Inc._ ![ADP Editorial Team](/-/media/adp/resourcehub/images/authors/resourcehub_headshot_defaultlogo_250w_en.png?h=250&iar=0&w=250&rev=bd3d17f5038e4ff3aef554d2642143cf&hash=52D2290FEA29314404E1E73B03D0D26D) [ADP Editorial Team](/resources/authors/a/adp-editorial-team)The ADP editorial team is comprised of human resource professionals with extensive experience solving complex HR challenges for businesses of all sizes. ## Recommended for you - [Small business employee benefits](/resources/articles-and-insights/articles/s/small-business-employee-benefits) - [Give your employees more benefits than they expect](/resources/articles-and-insights/articles/a/adp-totalsource-give-your-employees-more-benefits-than-they-expect) ### ADP and its affiliates have your back with standout benefits and simplified administration. [Learn More](/what-we-offer/benefits) ## Related resources - [ FAQ ### Should I offer my employees health insurance? Learn More ](/resources/articles-and-insights/articles/p/peo-should-i-offer-my-employees-health-insurance) - [ FAQ ### Which employee perks attract talent? Learn More ](/resources/articles-and-insights/articles/p/peo-which-employee-perks-attract-talent)