Getting voluntary benefits right for Gen Z  

Getting voluntary benefits right for Gen Z
March 21, 2024

Gen Z is redefining the employer-employee relationship and that includes how voluntary benefits are structured and offered.  

By 2025, Gen Z (those born 1997−2021) will comprise 27% of the workforce, and this group has far different expectations than their older peers. With voluntary benefits supporting all aspects of total rewards, the right solutions can help solve the most pressing talent questions — including how to resonate with the newbies in the workplace. Mercer’s latest National Survey of Employer-Sponsored Health Plans found that as employers have broadened the range of voluntary benefits offered, a growing portion of their workers are choosing to enroll in them – 45% of eligible employees on average, up sharply from 36% in 2022.   

Gen Z meet today’s “VB”

In a recent survey of over 17,000 workers worldwide – including more than 2,000 in the US – Mercer analyzed the responses of Gen Z employees to provide a close look at what this generation wants and expects from employers. Compared to older workers, Gen Z would like more interaction with their employers, and more support in specific aspects of their lives. To deliver this kind of support, consider new options in voluntary benefits in these key areas:   

  • Mental health. Gen Z workers are the most likely to report being stressed about their daily lives. They take their mental health seriously and are open to accessing and trying various approaches to improve their overall well-being. Look for new supplemental health products that include benefits for depression, substance use, rehabilitation and other support for mental health.   
  • Financial wellness. Money management contributes to the stress. Gen Z wants to stay out of debt.  But many are paying down student loans, and many report that they struggle with undisciplined spending. Financial wellness solutions provide guidance and education that might be especially helpful to Gen . You might also consider programs that help employees avoid debt or borrowing by accessing funds from their 401(k) retirement savings.  
  • Inclusive benefits/health equity. Whether it is fertility support or preventative cancer screenings, Gen Z wants inclusive coverages that can support them as they enter different life stages. Voluntary benefits can help fill gaps in other benefit offerings. For example, some critical Illness insurance products now encompass fertility services, surrogacy, or treatment for autism spectrum disorders.  

Voluntary benefits carriers are focusing in these areas, expanding coverages and riders to encompass the changing needs and preferences of today’s workforce. These innovative offerings make it easier for employers to grab Gen Z’s attention and show how the company can walk the talk on meeting their needs. And even if new offerings are selected with Gen Z in mind, the ability to personalize the benefits package will appeal to workers in other generations as well.  

Voluntary benefits with value and impact

As rising healthcare costs squeeze benefit budgets, voluntary benefits allow employers to remain nimble and adapt to large-scale changes like a new generational cohort in the workplace. But to ensure that voluntary benefit offerings resonate with Gen Z, lay the groundwork for success:  

  • Personalizing the portfolio. By gauging the generational diversity of their employee population today, employers can determine what new or enhanced benefit offerings would meet new needs and still align with business goals and objectives. Customize benefit solutions based on specific workforce characteristics (age, income, gender, etc.), keeping industry benchmarks in mind.  
  • Searching for synergies within total rewards. Survey all benefits (medical, life, absence, disability and voluntary) to holistically address Gen Z needs. For example, explore whether leave policies meet family leave expectations. Consider a voluntary PTO exchange option that would give employees the ability to redirect unused time in ways that resonate with them.  
  • Elevating communication strategies. A PDF benefits booklet is not going to cut it for Gen Z to know the value of the benefits package. Benefit communication needs a dedicated, year-round effort that not only covers the “what” of solutions but also explains plan design elements and features that will help employees utilize them to the fullest.  

Gen Z respondents in the survey were more likely than older workers to say that benefits are a reason to stay with their employer. Designing the right benefits program is a way to partner with Gen Z on improving their physical, mental and emotional health and their financial well-being — and it shows that their employer is listening and cares about their holistic experience.

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