Leaders often ask what the return on investment of voluntary benefits is. Voluntary benefits are becoming more popular among employers, such as supplemental dental/vision, accident, critical-illness, hospital indemnity, identity-theft protection, pet insurance, legal plans, and more, to give people choice and fill gaps that core plans don’t cover. But the answer about the ROI isn’t just a single number.
ROI shows up in multiple ways: dollars saved on claims and turnover, improved employee wellbeing and engagement, and stronger recruiting competitiveness. Let’s break down the evidence to give practical tips on how to measure voluntary benefits return.
What are voluntary benefits?
Voluntary benefits are extra coverages employees can choose to add to their benefits package, like dental, vision, accident, critical illness, hospital indemnity, legal, or even pet insurance. Unlike core benefits, these are often employee-paid (sometimes with employer support), giving people more flexibility to pick what really matters to them and their families.
If employees have to pay for them, why are they a win?
Even though employees usually pay for voluntary benefits, they’re still a win for many reasons. First, they often get access to group rates, which are lower than what they’d pay on their own for the same coverage. These plans are also easy to manage, since premiums come straight out of payroll and claims are handled through trusted providers their employer already works with.
Plus, they provide more choice and peace of mind, employees can pick the benefits that fit their lifestyle, similar to the Lifestyle Spending Accounts (LSAs),
Are employers seeing value in the voluntary benefits offered?
The adoption of more flexible benefits is high and rising. A recent industry article shows that many employers view voluntary benefits as essential to a modern benefits package, and they’re seeing financial and strategic upside. For example, 77% of employers say voluntary benefits are essential to delivering a comprehensive benefits plan, and 74% see direct cost savings from voluntary benefits programs.
Those results come from employers’ perspectives, but other surveys show employee demand and satisfaction with voluntary offerings are meaningful drivers of ROI: companies that give employees more choice and more than a handful of benefits tend to score higher on recommendation and retention metrics. In short: employers are offering voluntary benefits and many are already reporting positive outcomes.
Do employees actually use voluntary benefits?
Usage varies by benefit type, communication, and workforce demographics, but yes, employees use voluntary benefits, and utilization matters for outcomes.
- Popular voluntary plans like accident, critical illness, hospital indemnity, identity protection, and legal/pet are repeatedly cited as high-utilization categories across surveys, especially when employers promote them well.
- Employees who both enroll in and successfully use voluntary benefits report better holistic health outcomes than those simply offered benefits but not using them; MetLife found a meaningful difference in self-reported wellbeing between users and non-users.
However, many employees don’t change their elections year-to-year. For example, a study reported that near to 72% of benefits-eligible workers kept the same coverage or made no changes in the most recent year studied, which signals inertia and opportunity: strong communication and decision-support tools can move utilization upward.
This is also a good reminder that communication is key in the utilization of any kind of benefits. For example, employees’ interests may change over time and they may be requiring new coverage. But if they don’t know their options, they won’t be able to shape their voluntary benefits accordingly. Employers, together with the broker, must educate and find effective ways to communicate the company’s benefits to their team.
How to measure the ROI of Voluntary Benefits: direct and indirect ways
Direct ROI (hard dollars):
- Reduced employer claims / cost-shifting: Well-targeted voluntary plans (e.g., hospital indemnity) can reduce the financial impact on employees during high-cost events, which in some cases reduces short-term disability claims or mitigates missed work, also indirectly lowering certain employer costs. Employer reports show perceived direct cost savings from voluntary programs.
- Administrative leverage / low employer cost: Because voluntary benefits are often employee-paid (or partially subsidized), employers can expand the value of their benefits package without large increases in payroll expense, improving benefits-per-dollar spent.
Indirect ROI (talent & performance):
- Recruitment & retention: Employers offering a robust menu of benefits are perceived as better employers; companies that provide more benefit options tend to have higher recommendation and retention metrics. Choice increases perceived employer care and can be a differentiator in tight labor markets.
- Employee wellbeing and productivity: Improved wellbeing maps to reduced presenteeism, fewer productivity losses, and higher engagement, all of which are real (though harder-to-quantify) contributions to ROI.
The Best Practices to Drive Strong ROI
Offering voluntary benefits by itself is not enough: ROI depends on implementation. Some of the practices to drive a strong ROI of the voluntary benefits are:
- Benefit design & relevance. Offer benefits aligned to workforce demographics and life stages (e.g., family-focused benefits for employees with dependents; identity protection for high-digital-work roles). Benchmarking reports clarify which plans are trending in which industries.
- Clear, repeated communication. As described earlier in this article, studies show that many eligible employees keep the same elections year-after-year, not because they’re satisfied, but because they don’t re-evaluate. Continuous, targeted communications (not just an annual open-enrollment email) increase enrollment and correct under-insurance.
- Decision-support tools. Employees need help comparing premiums, claim examples, and how voluntary plans integrate with core benefits. Tools and easy enrollment increase the likelihood that employees both enroll and successfully use the benefits when needed.
- Claims & outcomes tracking. Measure what matters: enrollment rates, utilization by plan, claims outcomes, employee satisfaction with claims experience, and turnover among enrolled vs. non-enrolled cohorts. Data drives optimization.
Recommended KPIs to measure ROI
- Enrollment rate (by plan and by demographic cohort)
- Utilization rate (claims per 1,000 covered lives; by benefit)
- Average claim amount & claim frequency (to understand financial impact)
- Employer cost savings estimate (where voluntary plans reduce employer liabilities)
- Employee satisfaction & Net Promoter Score (NPS) for benefits experience
- Turnover differential (compare turnover of those who utilize benefits vs. those who don’t)
- Absence / disability trends before and after voluntary program launch
Collect baseline metrics before launching or significantly changing voluntary programs; evaluate quarterly and iterate.
Voluntary benefits are no longer just a nice-to-have, they’re an essential part of a modern, flexible benefits strategy. When designed thoughtfully and communicated clearly, they can improve employee wellbeing, boost retention, and strengthen an organization’s overall value proposition. The key is making sure employees understand their options and feel supported in using them.
If you’re looking to make the most of your company’s benefits strategy or explore ways to communicate voluntary benefits more effectively, our team at SSA can help you find the right approach for your workforce.
