A good employee’s resignation rarely comes with enough warning to act on. One week the schedule looks stable. The next, a two-week notice is on your desk, telling you months of hard-won knowledge are about to walk out the door. Many small Maryland employers treat that scramble as unavoidable, as if turnover is simply the cost of running a lean operation. It doesn’t have to be.
Closing the gap costs less than most owners think. Instead, the lever that actually closes that retention gap isn’t a raise. It’s a short, well-chosen list of voluntary benefits, explained clearly and rolled out without overwhelming anyone. This builds on the broader case for offering strong employee benefits to small businesses, but focuses specifically on the voluntary lever that costs the least to pull.
What Are Voluntary Benefits, and Who Pays for Them?
Voluntary benefits are optional insurance products—like short-term disability, life insurance, and accident coverage. Employees choose them and usually pay through payroll deduction, on top of your core benefits. Even so, they sit outside the group health plan, but they’re offered through the workplace because group access makes them easier to get and often cheaper to keep.
How Voluntary Benefits Differ From Core Coverage
Core benefits, group health insurance above all, are the coverage most employers fund directly and treat as the baseline of any competitive offer. By contrast, voluntary benefits work differently. The employee elects them, and in most cases, the employee pays the premium. The employer’s role is to negotiate group access and administer payroll deduction, not to underwrite the cost.
Why That Difference Matters for a Small Budget
As a result, that structure is exactly why voluntary benefits fit a 2-50 person budget. A company can offer more benefits without raising payroll costs since employees fund the coverage themselves. For an owner competing for talent, that’s the appeal: more to offer, without a bigger monthly bill. That contrast matters even more for employers already budgeting around Maryland’s FAMLI payroll tax, a mandatory cost the employer absorbs no matter what.
Why Does Retention Depend on More Than a Paycheck?
Retention hinges on how supported employees feel. A paycheck alone rarely keeps them through a tough year.
What Makes an Employee Decide to Leave
SHRM’s 2026 State of the Workplace Report found that employees who see their employer as ineffective at meeting their needs are substantially more likely to leave. However, the two groups tell very different stories:
| Employee’s view of employer | Likely to leave within a year |
|---|---|
| Sees employer as ineffective at addressing needs | 51% at least somewhat likely to leave |
| Sees employer as effective at addressing needs | 77% say leaving is unlikely |
That gap is the retention problem, stated plainly.
What Losing an Employee Actually Costs a Small Business
Gallup’s most recent research puts real numbers on the risk. Replacement cost varies sharply by role:
- Frontline employees: roughly 40% of annual salary
- Technical and professional roles: roughly 80% of annual salary
- Leaders and managers: roughly 200% of annual salary
In a nationally representative Gallup study, 42% of employees who voluntarily left a job said their manager or organization could have done something to prevent it. In other words, the departure wasn’t inevitable, and something within the employer’s control could have kept that person on the team.
Which Voluntary Benefits Actually Improve Retention?
The voluntary benefits that move retention are the ones that protect an employee through a genuine financial or health emergency, not the ones that simply add a line to a benefits summary.
Coverage That Fills Real Financial and Health Gaps
A few categories consistently do that work:
- Short-term disability replaces income during medical leave—when a paycheck alone isn’t enough
- Life insurance gives an employee’s family a financial floor they wouldn’t otherwise have
- Accident and critical illness coverage cushions the out-of-pocket costs a health plan doesn’t fully absorb
- Dental and vision, where not already core, round out coverage employees notice is missing
Why a Short, Focused List Beats a Long Menu
A long menu of options isn’t generous—it’s confusing. That confusion is what makes employees ignore open enrollment. A focused list, chosen for what this specific workforce actually needs, gets used. By contrast, a sprawling one gets skipped.
What Do Voluntary Benefits Cost a Small Employer?
Voluntary benefits cost a small employer administrative time, not premium dollars, since the employee typically funds the coverage through payroll deduction.
Where Voluntary Benefits Fit in Your Benefits Budget
The U.S. Bureau of Labor Statistics reports that employee benefits now make up 30.1% of total private-industry compensation costs as of March 2026. Core benefits drive most of that share. Voluntary benefits, however, sit alongside them without meaningfully adding to it, since the funding structure is different from the start.
Employee-Paid vs. Employer-Paid Options
Some employers choose to subsidize part of a voluntary benefit’s premium as a differentiator, and that choice is available whenever the budget supports it. Still, it isn’t required to make the strategy work. Even a fully employee-paid voluntary lineup still expands what the business can offer, which is the point.
How Do You Choose the Right Voluntary Benefits for Your Team?
The right voluntary benefits are the ones that answer a gap your specific employees actually have, not a generic list pulled from a national carrier’s product catalog.
Starting With What Your Employees Actually Need
Younger teams starting families often value life insurance and accident coverage most. Teams closer to retirement care more about short-term disability and enhanced health options. Start there. A quick, honest read of the team’s makeup does more to shape a useful lineup than any generic best-practices list.
Rolling Out a Plan Without Overwhelming Your Team
Enrollment periods often fail for a simple reason. Employees never got a plain-language explanation of what they were actually signing up for. Employees skip benefits they don’t understand—not just ones they don’t want. That’s why rollout matters as much as selection.
Building Retention Into a Budget That Works
Turnover isn’t a fixed cost of doing business, and neither is a bigger payroll line. A short, well-explained list of voluntary benefits lets small employers compete—without breaking the budget.
Since 2001, Mark Stoner has built voluntary benefit strategies for Maryland employers—especially those without in-house HR. His role doesn’t end once a plan is selected. Talk to Mark about which voluntary benefits make sense for your team.