What Are Ancillary Benefits? Top Trends Every Company Should Know
It’s a question we hear a lot.
What are ancillary benefits?
Ancillary benefits are a secondary type of health insurance coverage. When traditional health insurance doesn’t cover deductibles, copays, or out of pocket expenses ancillary benefits can help to reduce the financial burdens of the insured.
There are some more unique ancillary benefits that are making their way into the workplace today, mainly fueled by the unique demands of the Millennial generation.
Are ancillary benefits a part of your current benefits package? Many companies are picking up on the ancillary benefits trend and enjoying the associated perks. If you’re considering adding ancillary benefits to attract and retain great talent, here’s what you should know.
Do Your Benefits Need a Makeover?
Ancillary benefits no longer fall into the luxurious benefit category. As the economy continues to improve, employers are more aware than ever that it’s a candidate-driven market. Companies need to do everything they can to attract and retain their industry’s top talent.
Using benefits as a strategic tool for recruiting isn’t a new tactic. But we’re learning just how effective this method can be. According to the 2018 Employee Benefits Report, companies who market their benefits experience better overall company performance along with improved recruitment and retention numbers.
If you’re thinking about improving your benefits package, you’re not alone. More than 72% of organizations involved in the survey reported increasing their benefits offerings within the last year to retain employees.
Your company’s benefits are about more than covering an employee’s trip to the doctor. They have an overall effect on your entire business. Adding ancillary benefits to your current coverage options can boost morale, engagement, and your revenue.
How Ancillary Benefits Work
Ancillary benefits are also known as voluntary benefits, though they can be classified as employer-contributory as well. The difference comes down to who pays the associated premiums.
With voluntary benefits, the employee pays 100% of the premium, making this type of benefit simple to offer as an employer. The premium is deducted from the insured’s paycheck and the company isn’t required to contribute (though they can).
With employer-contributory benefits, an employer typically pays between 50 and 100% of the premiums. The remaining premium, if anything, is deducted from the insured’s paycheck.
When you grow your benefits package by offering voluntary types of coverage, a few things can happen. Your business’ reputation can improve within the employment marketplace. Current employees can become more engaged and loyal, and you may be able to lower FICA contributions by taking advantage of a section 125 cafeteria plan. As an employer, it’s in your best interest to offer ancillary benefits.
Common Types of Ancillary Benefits
The Millennial workforce expects more than simple health insurance and a week of paid vacation from today’s employers. As the largest working demographic, here are a few ancillary benefits you can offer to meet their expectations.
- Vision and dental coverage: Probably the most common types of ancillary benefits, dental and vision plans offer limited coverage for specified vision and dental expenses. According to an American Dental Association Survey, more than 30% of young adults have tooth decay, which is believed to be directly related to a lack of dental insurance.
- Life insurance: A common ancillary benefit, life insurance pays a fixed amount of money upon the insured’s death. Three-quarters of Millennials don’t carry life insurance because they believe other benefits are more important at this stage in their lives. But as the generation ages and realizes the importance of this type of coverage, not offering it could be a reason to seek employment elsewhere.
- Disability insurance: The average worker has a 30% chance of becoming disabled. Offering short- and long-term disability insurance offers Millennials a back-up plan should they be unable to work due to an unforeseen injury or illness. Disability insurance can also provide women with benefits after the birth of a child.
- Pet insurance: More than a third of pet owners are Millennials, making this a popular and relatively new ancillary benefit. In 2018, more than 6,000 companies offered Nationwide pet insurance.
- Wellness benefits: Wellness benefits could include a wide assortment of perks, like free gym memberships, flexible work hours to focus on physical and mental health, or providing healthy meal plans and access to simple food prep appliances during break time. Millennials desire a healthy work-life balance and by finding ways to help them create harmony, you’ll be able to attract and retain Millennial employees.
Are Ancillary Benefits for Your Company?
When employees are happy, they’re more engaged, dedicated, and loyal. Also, put simply, happy employees are better workers and people.
So, what are ancillary benefits? They’re a simple way to support employees both inside and outside of the workplace.