Ancillary Benefits: Why They Should Matter to You

When you think about benefits, the first thing that comes to mind is probably, “of course. I want to get all of them”. But as an employer or a recruiter,…

May 11, 2022

Written by Trey Bongiovanni

When you think about benefits, the first thing that comes to mind is probably, “of course. I want to get all of them”. But as an employer or a recruiter, aren’t you looking for more? While it’s important to give your employees a competitive benefits package, you can do so much more to bring value to them and ensure they have a great employee experience.

One way to do that is by offering ancillary benefits. What are ancillary benefits, you ask? This blog post will discuss ancillary benefits, their perks, coverage, and more. 

What Are Ancillary Benefits? 

Ancillary benefits, also called supplemental benefits, are a type of insurance that covers services and products that are not typically included in your health plan. This can include things like dental care, vision care, prescription drug coverage, and more.

Why Are They Important?

There are many reasons why ancillary benefits are important to employees. Here are just a few:

They offer peace of mind: It can give you peace of mind when you know you have coverage for unexpected health expenses.

They’re affordable: Ancillary benefits are often more affordable than traditional health insurance plans.

They’re convenient: Many ancillary benefits providers offer online account management and mobile apps to access your benefits information easily.

They cover a variety of services: Ancillary benefits can cover a wide range of services, from dental care to prescription drugs.

Ancillary Benefit Plans

When it comes to ancillary benefits, there are two types of plans: voluntary and employer-contributor.

Voluntary: Employees can elect to purchase ancillary benefits through a private insurer.

Employer-contributor: Employers offer ancillary benefits as part of their employee benefits package. This means employees do not have to elect to purchase coverage, and it is usually offered at a discounted rate.

Which Type Is Right for Your Business?

The type of ancillary benefits you offer will depend on your business and what’s best for your employees. If you’re looking for a way to offer more value to your employees without breaking the bank, employer-contributor plans may be the right option for you. However, if your employees want more flexibility in choosing their coverage, voluntary plans may be better.

Ancillary Benefit Types

There are several ancillary benefit types available to offer to your employees. It’s important to think about more than just the bottom line when it comes to Health and Benefits. Some of the different benefit types you can offer include: 

Vision and Dental Coverage: Vision and dental coverage is a popular ancillary benefit. It’s affordable, convenient, and covers a variety of services.

Prescription Drug Coverage: Prescription drug coverage is another important ancillary benefit. It can help employees save money on prescriptions and medications and keep them healthy.

Life Insurance: Employers often offer life insurance as an ancillary benefit. This can provide peace of mind for employees and their families in the event of death.

Accidental Death and Dismemberment Insurance: Accidental death and dismemberment insurance is another valuable ancillary benefit. It can help employees cover costs associated with accidents, such as medical expenses or funeral costs.

Hospital Indemnity Insurance: Hospital indemnity insurance is a type of coverage that can help employees pay for hospital stays. It’s a valuable ancillary benefit for employees who are not covered by traditional health insurance plans.

Critical Illness Insurance: Critical illness insurance is a type of coverage that can help employees pay for medical costs associated with critical illnesses, such as cancer or heart attack.

Employee Assistance Programs: Employee assistance programs (EAPs) offer counseling and other resources to employees who need help. They’re a valuable ancillary benefit for businesses of all sizes.

Group Term Life Insurance: Group term life insurance is a type of life insurance that offers coverage to a group of people. It’s a valuable ancillary benefit for businesses that want to provide coverage to their employees.

Health Savings Account:  A health savings account (HSA) is a type of savings account that can pay for healthcare costs. It’s a valuable ancillary benefit for employees who want to save money on healthcare costs.

Other Types of Ancillary Benefits You Should Consider

  • Pet Insurance
  • Accident Insurance
  • Accidental Death Insurance
  • Wellness Programs

Ancillary Benefits for Employers

Ancillary benefits are quite favorable not only for employees but also for employers. This is because ancillary benefits cover many services that employees and their families may need. Employers know that their employees are more likely to stay with them if they offer valuable benefits like: 

They can help you attract and retain top talent:  Employees want to work for a company that cares about their well-being and offers comprehensive benefits. Ancillary benefits are a great way to show your employees that you care about their health and well-being.

They can help reduce healthcare costs: You can help reduce your company’s healthcare costs by offering an ancillary benefits plan. This is because employees will have access to various services and coverage options that can help them stay healthy.

They’re convenient for employees: Ancillary benefits are convenient for employees because they offer various services and coverage options. Employees can choose the plan that best suits their needs and budget.

They offer various services and coverage options: Ancillary benefits plans offer a variety of services and coverage options, which means employees can choose the plan that best suits their needs and budget. This is a huge benefit, as it allows employees to pick the plan that fits them best.

Money used before taxes:  The money used to pay for ancillary benefits is considered pre-tax income. This means that employees will not have to pay taxes on their money to pay for their benefits. This can be a huge saving for employees, lowering their taxable income.

Value-Added Benefits for Employees

Ancillary benefits are also great for employees. Some of the benefits they enjoy include:

  • They can save on their healthcare costs.
  • They have access to a variety of services and coverage options.
  • They can receive convenient care.
  • Their employers care about their health and well-being.
  • Reduced stress levels and improved mental well-being.

When it comes to ancillary benefits, both employers and employees stand to reap several rewards. If you’re looking for a way to improve your employee’s well-being while also reducing your healthcare costs, then ancillary benefits may be right.

When Is It Best To Start Thinking About Ancillary Benefits?

Ancillary benefits should be a part of your benefits planning process and traditional health insurance plans. The best time to start thinking about ancillary benefits is when you’re creating or updating your employee benefits package. This will give you enough time to research providers and select the right plan for your business. 

Business Owner

If you’re a business owner, it’s never too early to start thinking about ancillary benefits. Even if you don’t currently offer any benefits, it’s good to be familiar with the types of coverage available and how they might benefit your employees.

Employee

If you’re an employee, you should start thinking about ancillary benefits when you’re considering your health insurance options. Many employers offer some ancillary benefits, so it’s worth investigating whether your company offers any coverage that would be beneficial to you.

Who Administers the Plans?

Insurance companies typically administer ancillary benefits. However, some employers choose to self-insure their ancillary benefits. This means that the employer pays for claims out of their own pocket rather than using an insurance company.

If you’re a business owner, you’ll need to decide whether you want to use an insurance company or self-insure your ancillary benefits. There are pros and cons to both options. Insurance companies can be more expensive, but they often offer more comprehensive coverage. Self-insuring can be less expensive, but it requires more time and effort to manage claims and payouts.

Pros and Cons of Self-Insuring Your Ancillary Benefits

There are pros and cons to self-insuring your ancillary benefits. Some of the pros include:

  • You have more control over your coverage.
  • You can tailor your coverage to meet your specific needs.
  • You may be able to save money on premiums.

Some of the cons include

  • You’ll need to manage claims and payouts yourself.
  • You may be at risk for large payouts if there are a lot of claims.
  • You’ll need to have enough cash on hand to cover payouts.

It’s also worth noting that some states have laws limiting the number of money businesses can self-insure. These laws are designed to protect employees in a major disaster, such as a fire or natural disaster. If you’re considering self-insuring your ancillary benefits, check your state’s laws to see if there are any restrictions.

Pros And Cons Of Hiring Professional Insurers For Ancillary Benefits 

There are pros and cons to hiring professional insurers for your ancillary benefits. Some of the pros include:

  • You don’t have to manage claims or payouts yourself.
  • The insurer will handle all the paperwork for you.
  • You may be able to get more comprehensive coverage.

Some of the cons include:

  • Professional insurers can be more expensive.
  • You may not have as much control over your coverage.
  • The insurer may not be willing to tailor your coverage to meet your specific needs.

Ancillary Benefits for Your Employees

Ensuring you’re getting the best care for your employees is highly important. Not only do you want to provide a great place for them to work, but you also want to ensure their health and well-being are taken care of. That is why Nesso Benefits count with knowledgeable staff dedicated to hearing your demands and developing custom strategies to fit your needs.

If you’re looking for a way to provide even more value to your employees, consider ancillary benefits. At Nesso Group, we can help you set up a plan that meets your needs and budget. Contact us today for more information.

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