As an employer, you’ve probably heard the term “Ancillary Benefits” being thrown around by your insurance carrier or benefits broker. But what does this jargon mean?
More importantly, why should an employer offer ancillary benefits alongside their health plan or as a stand-alone option?
What are "Ancillary" Benefits?
An ancillary benefit is a type of product, coverage or service designed to supplement a group health insurance plan.
These benefits include Dental and Vision Insurance, Life and Disability Insurance, as well as non-traditional or non-insurance products like telemedicine or health advocacy services. Critical Illness and Accident plans also fall under the ancillary umbrella.
Majority of the time, ancillary benefits are offered alongside a health insurance plan as a way to round-out an employer’s benefits package and help pay for any medical-related expenses that the primary plan doesn't cover; however, what many employers don’t realize is that most ancillary benefits can be offered as stand-alone plans (no health insurance plan necessary!) as a way to bring tremendous value their employees. This strategy is especially useful for small employers who can’t afford to offer traditional group health insurance plans, yet still want to support their employees' health and wellbeing.
So why should an employer offer ancillary benefits alongside their group health plan or as a stand-alone option?
REASON #1: You can’t make employees happy with health insurance.
Let’s face it. Health insurance is a very emotional subject. Employees associate health insurance with peace of mind and security for their family. They expect the most value out of their plan at the lowest cost possible, which in today's market, isn't the easiest balance to strike.
Health insurance has also become so complicated that most of the time, employees don't fully learn about their plan until they have to utilize the plan's benefits. They put it off reading the “fine print” and, unsurprisingly, have less satisfaction with the plan because of it.
Unfortunately, there is no one-plan-fits-all solution when it comes to health insurance (that we know of anyway!), so despite employers' best efforts, you can't make your employees truly happy by offering only health insurance.
REASON #2: Health insurance premiums rise at 2 - 5 times the rate of dental, vision, life and disability premiums.
When it comes to rate increases, ancillary products are generally more stable and more predictable than your average health insurance plan. For employers, this means more concise long-term planning and budgeting. The more money that you put into ancillary benefits (as opposed to health insurance benefits), the lower your overall increases will become.
REASON #3: Plans can be offered at no cost to the employer.
Ancillary benefits are typically products that employees can’t get on the open market. (Or at least, not without paying significant premiums.) Even if your employees are paying 100% of their elected plan’s premium, they will still love and appreciate that you offer these benefits and are passing along an affordable group rate.
Additionally, unlike group health insurance participation requirements, there is no minimum to the number of employees that need to enroll in these plans in order for you to offer them.
REASON #4: Attract and retain top talent.
A full benefit package is one of the most appealing incentives that you can offer prospective employees. In fact, according to a new survey conducted by the American Institute of CPAs, 80% of workers would choose a job with benefits over an identical job that offered 30% more salary.
And practically speaking, the more benefits that an employee is enrolled in, the less inclined they are to leave you! (You know that feeling when you upgrade your cell phone, but your contacts don’t transfer properly so then you have to start from scratch? Agony, right? Well, that’s how most people feel about having to change their insurance benefits!)
In order to attract and retain top talent, you have to stay competitive with your work perks, which includes ancillary benefits.
REASON #5: Ancillary benefits are (usually) less complicated.
You can't appreciate what you don't understand, right? Well unlike health insurance plans, ancillary plans are usually cut and dry: You pay your premium = You get the benefit of that plan.
While there are certainly some exceptions out there, employees typically have an easier time understanding how ancillary plans work and how to access their benefits, making them more inclined to appreciate those benefits and YOU as their employer, for offering them.
And we all know that appreciative employees make for stronger businesses!
Whether you currently offer a health insurance plan and are are looking to round it out with supplemental benefits, or you’re on a tight budget but would like to explore offering your employees stand-alone group ancillary options, Pendella can help.
Our quoting process is quick and easy and our Benefit Advisors will make recommendations based on your specific circumstances, needs, and budget.
Request a quote or contact us via phone, email or chat to learn more!