How to create a practical voluntary benefits package your employees want and use

Long gone are the days of a one-size-fits-all benefits plan. Today, businesses can (and do) choose a suite of benefits that best suit their goals and meet employee wants and needs. That includes voluntary benefits, which have increased in both breadth and depth in recent years.

A voluntary benefit is simply a benefit that’s offered by you, an employer, with participation optional by employees. In general, voluntary benefits tend to be less costly for employers but offer high value for employees. You can use voluntary benefits as a lever to appeal to potential employees you’re actively recruiting, or to encourage retention for existing employees.

What’s the formula to create and offer a voluntary benefits package that’s a good fit for your goals and employees’ needs? Read on to find out.

Understand the scope of voluntary benefits (and how you can use them).

A decade ago, employers had a limited suite of voluntary benefits to offer employees. That’s no longer the case.

Today’s voluntary benefits include a host of benefit offerings that are both practical and impactful. Generally, they fit into four categories: health and wellness; financial wellness; personal benefits; and security.

Take options for health and wellness—insurance for accidents, critical illnesses, and hospital stays, for example. Those voluntary benefits may cover a range of expenses, such as out-of-pocket medical costs and related household bills. Other voluntary benefits may include financial wellness classes, caregiving support, and even flexible monthly stipends/choose-your-own-perks for employees to use as they see fit.

Why does this expansion matter to your business? There are a couple of reasons. First, a distinct set of voluntary benefits can support your recruitment and retention efforts. According to a Principal^® 2026 survey of business owners, the #2 reason for offering benefit packages is to attract and retain talent.

Those voluntary benefits (and benefit programs in general) also signal to employees that your business values them as people. That translates into improved employee satisfaction for 85% of organizations. “We don’t magically leave our personal lives at the door when we enter our workplace,” says Kara Hoogensen, senior vice president of Benefits and Protection. “Employers are well-served to think about their team members as whole humans—people who will take care of business if the business takes care of them.”

Evaluate costs for you and your employees based on the type of voluntary benefit.

Here’s an oft-misunderstood fact about voluntary benefits: They’re typically, but not always, less costly for employers to add. The real value is that “employees are looking to their employers now more than ever for access to these products versus trying to go out on the marketplace and get them on their own,” says Annette Fitzgerald, national practice leader, workplace benefits, with Principal.

Take a hospital stay, for example: The average daily cost of a hospital visit in the U.S. is $3,297. Hospital indemnity insurance, which is typically a voluntary benefit, enables an employee to opt in to coverage that pays some, if not all, of the cost of that stay. Employees that elect hospital indemnity insurance as part of their voluntary benefits then have a resource they can lean on for planned or unplanned hospital stays.

Understand workforce benefit preferences and generational needs and wants.

The entirety of your benefits package may be part of what attracts (and keeps) employees, but the value of specific benefits themselves are by no means universal. Voluntary benefits are a way for an employer to acknowledge those similarities and help appeal to employees with diverse goals—and roadblocks—based on their life stage. "A 25-year-old may have student loans, while a 55-year-old may be making catch-up contributions into their retirement account," says Nate Schelhaas, senior vice president of Benefits and Protection. "Understanding what your employees want is critical to your success."

To craft a benefits package with wide generational appeal, think about options with impact on different age groups. In general:

• Gen Z may favor mental health benefits and programs, lower premium and out-of-pocket costs for health insurance, a fitness club membership or a workplace gym, and pet insurance. 
• Millennials might look for mental health benefits, a fitness club membership or a workplace gym, paid parental leave (across gender identities), a Flexible Spending Account (FSA) for childcare expenses, assistance with building families (adoption, infertility coverage), vision and dental insurance, and pet insurance. 
• Gen X often pays attention to paid parental leave (across gender identities), caregiving benefits or leave, and voluntary coverage (life, long-term care, critical illness*, accident insurance, hospital protection). 
• Baby boomers may be attracted by a fitness club membership or a workplace gym, vision and dental insurance, voluntary coverage, caregiving benefits and leave, and discounts on health services (e.g., chiropractic care).

Another way to gauge what your future workforce may want is to analyze why employees leave (or stay). Watch for trends during reviews or exit interviews that point to limited or inaccessible benefits. And just because you don’t have a benefit now doesn’t mean you can’t have a benefit in the future. That’s a timetable you can share with employees for feedback and planning, too.

*Specified Disease in New York.

Communicate about your voluntary benefits package, then evaluate and adapt.

More and more employees consider voluntary benefits essential—and are more likely to take advantage of them. But still, there are stubborn gaps in how well those benefits are understood by the people who have access to them. Nearly half of business owners say that complicated language gets in the way of benefit use, according to 2026 Principal business owner insights research.

Clear, regular benefit communication can help. At PlanOmatic in Denver, that includes education sessions every six months. “Our employees learn something new every single time,” says Kennedy Watson in human resources. “I think that as benefit offerings get more competitive and there's more and more you can offer your team, educating them on how to engage with those, how to take advantage of those, is just a necessity.”

You can also use key metrics to evaluate uptake and use. How many employees opted in? Can you use an annual survey to gauge awareness of and satisfaction with benefits, particularly new ones? When employees are aware of and are using benefits, they are more likely to appreciate them and remain engaged. That’s how you turn your benefits plan into a key differentiator, helping you retain talent, while also making a real difference in the financial lives of your employees.