Accident Insurance Participation Leads Voluntary Benefits Growth

Accident insurance holds the highest participation rate among all voluntary benefits tracked in Voya's 2025 State of Employee Benefits Report, followed by critical illness and hospital indemnity insurance. All three outperform legal coverage, identity theft protection, and pet insurance — and participation is growing across every generational group, not just among younger employees. For employers reviewing their open enrollment results this Q1, that cross-generational breadth is the signal worth paying attention to. It means these products are meeting a real financial need across your workforce, not just appealing to a specific demographic.

The employer adoption side of the data is equally direct: 90% of employer decision-makers view accident, hospital indemnity, and critical illness insurance as essential for competitive total rewards packages, according to Voya's survey data. That's not a marginal trend — it's a near-consensus among HR and benefits leaders that these products have moved from optional to expected in a well-designed benefits portfolio.

Why Accident and Hospital Indemnity Insurance Are Leading Growth

The underlying driver is straightforward. As CNBC reported in November 2024, more employers are offering accident, hospital indemnity, and critical illness coverage specifically to fill financial gaps for employees enrolled in high-deductible health plans. HDHP adoption has continued to expand as employers manage rising medical premiums — but it shifts meaningful out-of-pocket exposure onto employees. A $3,000 family deductible is manageable in theory and disruptive in practice when an employee breaks a wrist or spends three days in the hospital.

Accident insurance addresses this directly. It pays a lump-sum cash benefit for covered events — broken bones, burns, sprains, emergency room visits, ambulance transport — and employees can use the funds for any purpose. That means the benefit can cover the HDHP deductible, a week of childcare while recovering, or the mortgage payment that would otherwise be missed. Hospital indemnity insurance works similarly, paying a fixed daily benefit for hospital stays, critical care admissions, and rehabilitation. Neither benefit is restricted to medical expenses, which is a meaningful distinction for employees managing household cash flow after an unexpected event.

Both products are available with guaranteed issue options at initial enrollment, meaning no medical underwriting or health questionnaires. Coverage extends to spouses and dependent children under most carrier structures. Claims are typically processed within 10 business days. And critically for employers evaluating the cost equation: both are entirely employee-paid through payroll deduction, adding zero employer premium cost while meaningfully expanding the benefits package.

The HDHP Coverage Gap Is Getting Wider

Employers who adopted HDHPs to control premium costs in recent years are now managing a secondary problem: employees who are underinsured for routine accidents and hospitalizations. The gap between what a health plan covers and what an employee actually owes out-of-pocket has grown wide enough that a single hospitalization can create real financial hardship for employees at most income levels. Accident and hospital indemnity insurance exist precisely to bridge that gap — and they do it without requiring employers to reverse course on HDHP strategy or absorb higher medical premiums.

For Long Island employers competing for workers in a high-cost labor market, this matters at the offer stage. Candidates evaluating two comparable compensation packages will increasingly weigh the supplemental benefit menu, particularly as Gen Z and Millennial workers — who now represent the majority of most professional workforces — expect tailored voluntary benefits options as part of a complete total rewards package.

Employers building or expanding their voluntary and supplemental benefit programs should evaluate accident and hospital indemnity coverage as foundational additions rather than secondary options. The participation data supports that framing: these are the products employees are actually electing, not the ones that look good on a benefits guide but go unused.

Minimum Participation Requirements and Enrollment Strategy

One operational consideration employers often overlook: most carriers impose minimum participation thresholds before they'll issue accident or hospital indemnity coverage — typically either a minimum headcount (often two employees) or a percentage of benefits-eligible employees (commonly 25%). This means enrollment communication directly affects whether the benefit can be offered at all, not just whether it's well-utilized.

Participation rates increase measurably with targeted employee education. Generic open enrollment materials that list accident and hospital indemnity coverage alongside a dozen other options tend to produce lower elections than communication that explains the specific financial scenarios these products address. Employees who understand that a covered fracture could generate a $1,500 lump-sum payment — which they can apply directly to their HDHP deductible — make different enrollment decisions than employees who see a product name with no context.

Carriers have improved their enrollment platforms significantly, with integrated claims tools and automatic benefit payment reminders that reduce the administrative friction that previously discouraged employees from filing claims. Higher claims utilization, counterintuitively, tends to reinforce participation at renewal — employees who received a payment are far more likely to re-enroll than those who never filed.

ERISA Governance Applies Here Too

A compliance note that's increasingly relevant: recent ERISA litigation has targeted employer-sponsored voluntary benefit programs, including accident and hospital indemnity insurance, even where employees pay all premiums. Employers who facilitate enrollment, administer payroll deductions, and select carriers for these products have assumed a level of fiduciary responsibility that requires documentation. That means maintaining records of how carriers were evaluated, understanding broker compensation arrangements, and ensuring that the selection process reflects prudent fiduciary oversight — not just accepting a broker recommendation without independent review.

This isn't a reason to avoid offering these products. It's a reason to offer them with appropriate governance in place. Employers who want to evaluate their current voluntary benefit arrangements through a total rewards and HR strategy lens — including how accident and hospital indemnity coverage fits within a compliant, well-documented benefits structure — should treat that review as part of their Q1 planning process.

Three Actions for Q1 Planning

• Audit your HDHP gap exposure. If you've shifted more employees onto HDHPs in the last two years without adding accident or hospital indemnity coverage, calculate the realistic out-of-pocket exposure your employees face for a single hospitalization or covered accident. That number is the business case for adding these products at zero employer cost.
• Review open enrollment participation by product. If you already offer accident or hospital indemnity insurance and participation is below 25%, treat that as a communication problem, not a product problem. Pull your enrollment data by age cohort to identify which employee segments are underenrolled and build targeted communication for next year's enrollment cycle.
• Document your carrier selection process. Given current ERISA litigation trends targeting voluntary benefits, employers should ensure they have a documented rationale for their carrier choices, including competitive evaluation criteria and an understanding of broker compensation arrangements for these product lines.

Accident and hospital indemnity insurance are leading voluntary benefits participation because they solve a specific, measurable financial problem that HDHP adoption has created for employees. The employer cost is zero. The administrative burden is low. And the participation data — consistent across every generational group — indicates broad workforce demand. For employers finalizing their 2026–2027 benefits strategy, these are the additions most likely to improve both participation rates and employee satisfaction scores without adding to the benefits budget.

Employers with questions about accident or hospital indemnity insurance program design can reach us at info@bentonoakfield.com.

This content is for informational purposes only and does not constitute legal, tax, or benefits advice. Requirements vary based on employer size, location, and plan structure. Information is current as of 2026-02-20. Employers should consult qualified advisors for guidance on their specific circumstances.