With the Affordable Care Act, employee benefits have taken an interesting turn. Simply providing medical insurance no longer distinguishes employers (with 50 employees or more) from one another, but the extent of the benefits plan can provide that distinction. Whether it’s a robust medical plan, or the legal minimum requirement, employer clients need to be aware of some ancillary benefits their teams are looking for and how they can improve employee productivity and retention.
Ancillary benefits are expected to increase over the next several years in response to the ACA, but these benefits don’t have to be costly for your employer clients. After all, they’re already paying for health coverage for their employees (or are prepared to pay the fine). They don’t necessarily have to pay for these benefits themselves; they can be employer funded or voluntary — meaning employees pay for the costs. Some of these supplemental benefits include each of the following, each with their own set of details:
- Group life insurance
- Accidental death and dismemberment insurance
- Dental coverage
- Vision coverage
- Disability coverage
- Long-term care insurance
- Other voluntary benefits
Also see: “5 tips to kick off retirement planning conversations.”
Your client’s priority as an employer lays first with medical and dental; ancillary benefits fall between that and voluntary benefits. They supplement regular group health insurance. But as with any “extras” provided for employees, the first thing that comes to mind is another hit to the company wallet. Keep in mind, these benefits are a good thing for employers as well — it’s a win-win situation. Employees get the coverage they want and employers get benefits as well. These include:
- Lower employer FICA contributions if the business takes advantage of Section 125 so that employees can use pre-tax dollars for these benefits.
- Employees highly value ancillary benefits, so it would improve employer branding.
- Offering ancillary benefits makes an organization more competitive in the talent market.
- The employer can share the cost of these ancillary benefits so they don’t break the bank while satisfying employee desires for additional coverage.
Why they are still important
Because basic medical insurance is no longer considered competitive in the talent market, employers need other ways of attracting and retaining great talent. That’s where ancillary benefits play a major role. These voluntary benefits aren’t just nice to have anymore; they are necessary facets of recruitment and retention programs. Only about 60% of adults have dental coverage, for example, so providing this ancillary benefit gives an organization a competitive edge.
As Philip Kaufman, president of UnitedHealthcare Specialty Benefits, said, “Many employees value these benefits, also known as supplemental benefits, and employers can offer them with little or no additional cost. Offering these supplemental benefits along with medical coverage can also give employers additional tools and information to help provide proactive outreach to improve employees’ health and productivity while more effectively managing medical costs.”
Also see: “5 ways to increase ancillary sales on an exchange.”
Employees are more likely to be healthier with ancillary benefits such as dental or vision coverage, because two regular checkups can show early signs of serious health issues like diabetes, high blood pressure and heart disease. When employees are physically well, they are less likely to take sick days, resulting in higher productivity rates. But unfortunately, 56% of Americans without dental insurance will skip preventive treatment altogether. Providing employees with small extras such as these ancillary benefits can make a big impact on an employer’s business.
Although ancillary benefits are by definition supplementary, they aren’t really optional in the bigger picture. They are part of what distinguishes an organization from talent competitors, and they help to keep employees healthy so they don’t miss days in the office. Don’t let the fear of cost deter your clients from offering ancillary benefits, they can be part of a voluntary benefits package. Be competitive, be ahead of the game.
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