Your company’s benefits package increases in value as attracting and retaining top talent becomes more difficult. While headlines insist that group health insurance packages are what job seekers want, it’s not the only healthcare benefit they seek. They know that a basic health plan isn’t enough to keep them healthy in today’s fast-paced workplace.
Ancillary insurance can play a big role in making your workplace more attractive for both current employees and potential job candidates. However, some companies might consider supplemental benefits, like vision and dental insurance, as less important compared to other offerings.
Is it less important though?
Let’s discuss how ancillary health insurance works and why you should offer this insurance to attract and retain top talent.
What is Ancillary Insurance?
By definition, ancillary insurance (also known as ‘voluntary benefits’) is secondary healthcare insurance often purchased along with major health plans or coverage. These supplemental benefits are designed to enhance your current health plans and give your workforce more support for their health and well-being.
There are different ways employers can offer ancillary insurance:
- Employer-contributory benefits. The employer pays for at least half of the premiums.
- Voluntary benefits. Employees pay 100 percent of the premiums. They still gain access to lower premiums by being part of a group plan.
While vision, dental and life insurance are the most popular types of ancillary coverage, they’re not the only options you have. Ancillary benefits can also include the following options to improve your healthcare offering:
- Accidental death policy
- Short-term and long-term disability
- Hospital indemnity
- Intensive care
- Critical illnesses
What are the Common Types of Ancillary Benefits?
The Millennial-populated workforce demands more than just a basic healthcare plan and a week of paid vacation. They want more.
Since they are the largest working demographic, here are some ancillary benefits you can add to your package to meet their expectations.
- Dental and vision insurance. These benefits are the most common inclusions in any ancillary health insurance plan. These plans offer limited coverage for specified dental and vision expenses. Many young adults experience tooth decay, which could be linked to a lack of dental insurance.
- Disability insurance. The average employee has a 30 percent chance of becoming disabled. Offering long- and short-term disability insurance offers employees a backup plan in case disability prevents them to work.
- Life insurance. Life insurance plans pay a fixed sum of money upon the death of an insured policyholder.
- Wellness benefits. Wellness benefits can include a variety of perks, such as flexible work hours, free gym memberships or healthy meal plans.
How Do Ancillary Benefits Work?
As mentioned above, there are two ways employers can offer ancillary insurance: employer-contributory or voluntary. The difference boils down to who pays the premiums.
With employer-contributory ancillary coverage, the employer pays between 50 and 100 percent of the premiums. The remaining premium is deducted from the policyholder’s paycheck. On the other hand, the employee pays 100 percent of the premium if their policy is classified under the ‘voluntary benefits’ category. The premium is deducted from the employee’s paycheck.
Do Your Benefits Need a Makeover?
Ancillary benefits aren’t just ‘luxurious’ benefits. As the economy follows an upward trajectory, employees know that they’re working in a candidate-driven market. Today’s businesses must do everything that they can to keep their employees happy and attract the best people in the industry.
Using health benefits as a strategic recruitment tool isn’t a new technique. But we’re learning just how effective ancillary benefits (and other healthcare plans) are. According to the 2020 Employee Benefits Report, businesses that market their benefits packages better benefit from improved retention and recruitment numbers.
If you’re thinking about improving your benefits package, you’re not alone. Many organizations involved in the survey have increased their benefits offering to retain talent.
Your company’s healthcare offerings are more than just offering coverage for an employee’s doctor visits. They have an overall impact on your business. Adding ancillary coverage to your current healthcare options can boost engagement, morale and your revenue.
Why Businesses Should Offer Ancillary Coverage
Employees care about all aspects of their health, which is why they look for businesses that care in the same way. Most talents prefer a position with more attractive benefits than a high-paying job. They would rather take a lower-paying job that had better health, vision, and dental insurance than a position that doesn’t take into account other ancillary benefits.
Including ancillary insurance won’t just make your benefits package more attractive; it also shows that you care about your employees. A little peace of mind goes a long way, so giving your team access to ancillary health insurance can save them from worrying about their health.
The additional emphasis on your team’s health can also directly impact the future of your business. Employees who feel valued are likely to be more willing in contributing to your company’s success. Better employee engagement can result in the following:
- Improved retention. High levels of engagement promote the retention of talent and improved organizational performance.
- Greater profitability. A 10 percent increase in productivity can increase your profits by $2,000 per employee per year.
- Reduced absenteeism. Engaged employees are more motivated to report to work compared to unmotivated workers.
What are the Benefits of Ancillary Insurance?
Investing in ancillary coverage is a win-win situation for both the employer and the employees. This type of insurance guarantees benefits for both parties.
Benefits for Employees
- Ancillary insurance costs are affordable. The risk is spread among a large group of people to keep the price of their premiums reasonable.
- Employees can use pre-tax money to pay for their benefits, thus lowering their taxable income.
- With ancillary vision and dental insurance, employees gain access to preventive care, not just when they’re already sick.
- Employees can enjoy the security and peace of mind that comes with group insurance.
Benefits to Employers
- Ancillary insurance has a high value among employees, which could enhance the employer’s reputation in the workforce.
- Get lower employer FICA contributions if you take advantage of Section 125. Your employees can use their pre-tax dollars to pay for the benefits.
- Employers don’t have to pay for voluntary ancillary benefits. They can also share the cost with their employees.
- Offering ancillary coverage makes your business more competitive in the recruitment marketplace.
In today’s workforce economy, employees want to work with employers who care. A basic healthcare plan isn’t enough to make the cut. If you want to be the top employer for talented employees, show them that you care by offering ancillary health insurance.