Just as the addition of spices can elevate an ordinary dish to a gourmet meal, including voluntary benefits in a benefits package makes the whole far greater than the sum of the parts.

By expanding the amount and variety of voluntary benefits offered to employees, employers can give the appearance of a broad benefits package. "Most employers are looking for ways to make their benefits offerings more attractive without taking anything from the company's bottom line," explains Vaughan Reale, president of New Jersey-based Advantage Benefit Planning.

Brokers can either help a company enrich its benefits programs with minimal expense or mitigate the negative effects of cost-cutting measures directed at existing benefits by helping clients expand the array of voluntary benefits that are available to employees.

Employers can also "improve employee loyalty by offering voluntary benefits" states Anita Verheul, executive vice president with the employee benefits practice of William Gallagher Associates. She acknowledges that it seems "counter-intuitive to offer more coverage options with people having less money" to spend, but notes that employees are "hungry for security.

"They are looking to spend money on the basics" that they paid little attention to in times of relative prosperity, she says.

Case in point: Advantage Benefit Planning has had "remarkable success" with a voluntary disability insurance program that replaces the employer-paid benefit. When one client offered this program to its employees, 90% enrolled.

What was a neutral move from the employee's financial viewpoint resulted in tax savings of $20,000 to $30,000 for the company that they were then able to reinvest in the health care of its workers.

ABP also is seeing more interest in Aflac or similar programs, as well as increased interest in long-term care options.

Legal note

Although voluntary benefits are important for employers, employees and brokers, everyone should be aware of the potential compliance obligations for such programs.

Compliance issues predominantly hinge on the question of whether or not an employer is deemed to be the sponsor of a voluntary plan.

If the employer is not deemed to be the sponsor, then they are neither required to file a 5500 form with the Department of Labor nor are they required to include Schedule A information in any form 5500 for an employer.

According to the DOL, an employer is not deemed to sponsor a voluntary plan when the following "safe harbor" conditions are met:

* The employer does not "endorse" a plan.

* There are no employer contributions.

* The employer collects premiums from employees through payroll deductions and remits the premiums to an insurer.

Unless an employer is truly compliant with the safe harbor provisions as outlined by the DOL, this matter warrants consulting with a knowledgeable outside resource.

Sticking to the basics

Expanding the array of voluntary benefits available to employees not only allows a company to bolster its benefits offerings without driving up expenses, but also allows employees to have more control over the benefits they want, which can increase loyalty.

The key is to "try and make sure that the benefits fit together," states Reale, adding that voluntary programs are an opportunity to "fill in the gaps."

Not all types of voluntary benefits are gaining popularity among employers and employees. "We're seeing a downturn in unusual benefits," explains Reale, "employees are choosing to spend their money elsewhere."

Brokers report that programs such as pet insurance or pre-paid legal assistance are losing favor as employees, like their employers, try to maximize their return on the money that they spend on their benefits.

Options that were previously popular or gaining in popularity, such as life insurance options, are also seeing a marked decrease in consumer and employer interest. For example, more expensive whole life insurance plans are being passed over for more economical term life insurance plans. As Reale points out, they are simply not cost effective in the current economic environment.

While employers of all sizes are investigating their voluntary benefit options, Reale does note that some smaller employers are more likely to express concern over their ability to communicate and enroll employees as well as administer a more elaborate plan.

It all comes down to the resources that an employer has and the demographics of their workforce. But if voluntary benefits can truly bolster the appearance of an employer's benefit offerings without cutting into their bottom line, they are a key tool that should be utilized to the fullest.

According to the Department of Labor, evidence that an employer endorses a plan exists when the employer:

•  Selects the insurer
•  Negotiates plan terms
•  Links coverage to employee status
•  Uses the employer's name or associates the plan with other employer plans
•  Recommends the plan to employees
•  States that ERISA applies to the benefits
•  Allows employees to pay for the insurance under a cafeteria or flexible benefits plan
•  Assists employees with claims or disputes