Is payroll deduction really necessary?

Is payroll deduction really necessary?


Sometimes, payroll deduction for voluntary products isn’t an option. Whether for technical reasons, employee demographics, or employer preference, payroll deduction might not be available. But when it is, it’s usually the preferred methodology.

But only considering what is easiest for us and the HR department is risky. It’s just as important to take heed of what’s best for the employees who buy our products. In a recent Eastbridge study, employees were asked to choose the payment method they’d prefer for benefits they contributed to or paid for entirely. Payroll deduction was the overwhelming choice among those surveyed at 76 percent.

All age groups, except the under-30 group, had strong preferences (84-97 percent) for payroll deduction. About half (51 percent) of the under-30 group prefers payroll deduction while 35 percent said they had no preference or were unsure. Only 14 percent prefers credit card or bank account payment systems.

In fact, the convenience of payroll deduction is one of the most important reasons employees buy voluntary products.

So if you decide to not recommend payroll deduction, understand which parties will benefit from the decision and which won’t. Even if you plan to recommend payroll deduction, ask how you might improve the way it is set up and the resulting implementation of the billing processes. But most importantly, it appears that our customers think this is where our efforts should be directed.