You may have seen this term while looking for group insurance. Ancillary benefits refer to benefits that are used to supplement group health insurance. These can include the three most sought-after employee benefits: dental, vision and life insurance.
There are two ways ancillary benefits can be funded: voluntary or employer-contributory. On employer-contributory ancillary benefits, the employer usually pays 50 - 100% of the premiums. On voluntary plans, the employer may contribute 0 - 49% of the premiums.
Through payroll deduction, employees pay whatever portion of the premiums that the employer does not cover. Then, when an employee uses their benefits, a claim is submitted and benefits are paid directly to the network-contracted provider or to the member (if a network provider is not used). For life insurance claims, the beneficiary is paid directly (in the event of a death).
There are many reasons why an employer may contribute more or less of the cost of an ancillary benefit. Companies may only cover the full cost of their health plan, and let employees choose to purchase a voluntary dental or vision plan. Others may find that offering employer-contributory ancillary plans encourages more employees to enroll.
The key is to know what works best for your business. Discussing your company and employees' needs with your insurance agent can help determine the best combination of these benefits.
Employees still need oral and vision care. Offering a health plan is not enough to keep employees healthy.
Research shows that dental and vision plans can be effective preventive healthcare tools that may lower medical claims costs in the long run. Early symptoms of high blood pressure, diabetes, and other diseases can be detected in an eye exam before showing up in a physical.
Health insurance also does not provide income protection in the event of a death. Life insurance can help employees protect their loved ones by providing a monetary benefit to cover the cost of a funeral or a debt.
Group life insurance has a high-perceived value as well. According to the U.S. Bureau of Labor Statistics, as of 2010, 96% of employees who had access to group life insurance took advantage of it.
Purchasing these benefits at a group level is more affordable than purchasing them on an individual basis.
Cost is limited for three reasons:
Whichever you decide, offering ancillary benefits can be a win-win proposition: