Why Your Voluntary Benefits May Go Unused

Many organizations invest real time and money into voluntary benefits, only to see disappointing employee participation at the end of open enrollment. The offerings are there, the carriers are reputable, the costs to the employer are often modest — and yet sign-up rates stay flat year after year. The result is wasted administrative spend, a missed retention tool, and a workforce that doesn’t feel any more supported than it did before.

It’s a frustrating pattern, and it raises a fair question: should you be offering more to stay competitive? In many cases, a stronger benefits strategy is less about expanding the menu and more about offering the right mix that employees actually value and, critically, understand. 

Signs Your Benefits Aren’t Competitive

Voluntary benefits — the supplemental coverages employees can elect on top of core medical, dental, and retirement — are among the most effective tools for attracting and retaining talent and filling the gaps traditional benefits leave behind. When participation is low, it’s often a sign that the strategy needs work, not the benefits themselves. 

A few indicators suggest a voluntary benefits program may be lagging behind:

• Enrollment rates that stay stuck in single digits or low double digits, year after year
• Higher turnover than industry peers, particularly among employees in the first two years
• Exit interviews and engagement surveys that rarely mention benefits as a reason to stay
• Few or no questions or feedback during open enrollment, which usually means employees aren’t engaging with the materials

Underutilization is not a sign that employees don’t want voluntary benefits. More often, it points to deeper strategic gaps in how those benefits are selected, communicated, and supported.

Why Employees Skip Voluntary Benefits

Today’s workforce often spans generations, with different financial pressures, life stages, and priorities. A benefits package that doesn’t account for those differences tends to miss the mark. You may be offering coverages that don’t resonate with younger workers while overlooking the protections that older employees want most.

Consider a 25-year-old employee with student loan debt and no dependents. Term life insurance may seem irrelevant for that employee, even though it’s often cheaper to lock in at that age. Critical illness coverage may also feel like something to worry about decades from now. Without education tied to where employees actually are in life, those offerings get skipped — not because they lack value, but because the value isn’t obvious.

The same misalignment can happen at the other end of the workforce. Employees nearing retirement may want long-term care or hospital indemnity coverage that the program doesn’t offer. 

Evaluating demographics, income levels, and life stages is the foundation of a voluntary benefits program that pays off.

Communication Gaps Reduce Participation

Even a well-designed program can stall out if employees don’t understand what’s being offered or how those benefits fit their actual lives. Three communication breakdowns show up most often:

• Lack of education: Employees receive a benefits guide but no real explanation of how each coverage works, when it pays, or how it complements their core plan.
• Poorly timed messaging: Information arrives in a single dense email two days before open enrollment closes, leaving no time for questions or thoughtful decisions.
• Overly complex explanations: Carrier-supplied materials full of insurance jargon overwhelm employees and push them toward the safest decision: opting out.

You also need to know whether your efforts are actually moving the needle. That means tracking participation rates — enrollment percentages, usage frequency, and any demographic patterns — alongside retention data, such as turnover trends and what employees say in exit interviews. Business-level signals matter, too: Engagement scores, productivity, and absenteeism before and after changes can reveal whether the program is delivering real value or just taking up space in the handbook. 

The U.S. Chamber of Commerce recommends using these metrics to evaluate the return on investment. If the numbers fall short, treat that finding as a diagnostic tool to identify barriers rather than a reason to abandon the program. 

Improving Voluntary Benefits Participation

Unused voluntary benefits don’t mean your New Mexico company should offer fewer of them. It may instead mean that your strategy needs sharpening. For instance, maybe you offer mental health and well-being resources and retirement savings plans, but your employees aren’t aware these benefits exist.

You may also need to audit the current offerings against employee demographics, layering in education throughout the year rather than only at open enrollment. Using plain-language tools, short videos, and one-on-one conversations can make decision-making easier.

By working with a knowledgeable NM insurance advisor, you can help your employees optimize their benefits. Reach out to Daniels Insurance to learn more.

FAQ About Voluntary Benefits

Are voluntary benefits worth it for employers?

Yes, when they’re implemented thoughtfully. Voluntary benefits can improve retention, employee satisfaction, and the perceived value of working at the company, often at a relatively low cost to the employer since employees pay the premiums. 

Do employees value voluntary benefits?

A benefits program’s worth depends on strategy and alignment, not just availability. Programs that match employee demographics and are paired with strong communication will be more attractive than programs that simply check a box.

What are considered voluntary benefits?

Voluntary benefits are supplemental coverages offered by employers that employees can elect and typically pay for through payroll deductions. Common examples include term life insurance, dental, vision, short- and long-term disability, accident insurance, critical illness coverage, and hospital indemnity. They’re designed to fill the gaps left by traditional medical and retirement benefits and to give employees more flexibility in addressing the financial risks that matter most to their stage of life.

About Daniels Insurance

At Daniels Insurance, Inc., we have a unique understanding of the risks that businesses like yours face on a regular basis. With the backing of our comprehensive coverages and our dedication to customer service and quick claims resolution, your business will be fully protected. For more information, contact us today at (855) 565-7616.